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Wash. governor OKs Colstrip bill, with partial veto

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Essential Energy Insights - February 2021

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Wash. governor OKs Colstrip bill, with partial veto

Washington Gov. Jay Inslee has signed, but partially vetoed,a bill to set up a decommissioning fund for the possible retirement of two unitsof the Colstrip coal-fired power plant.

The bill, SB 6248, addresses decommissioning and remediationcosts for Colstrip units 1 and 2, allowing the Washington Utilities and TransportationCommission to authorize Puget EnergyInc. utility Puget SoundEnergy Inc. to put regulatory liabilities into a retirement accountto cover those costs.

In a news release, Inslee said the bill not only provides certaintyto current and future ratepayers about how closure and cleanup costs will be recovered,but also offers certainty to the affected Montana community that the facility cleanupwill be adequately funded.

The governor vetoed section 3 of the bill, which would have restrictedaccess to the funds if the units close before Dec. 31, 2022, subject to certainexceptions.

"This section inappropriately changes the long-standingdefinition of how the commission determines whether utility investments and expensesare prudent," Inslee wrote to lawmakers. "It unnecessarily interfereswith the market and with UTC's role in determining how best to protect the ratepayersof Washington's investor-owned utilities."      

The Colstrip generating station, located in Montana, consistsof four separate coal-fueled generating units. Units 1 and 2, built in the mid-1970s,are jointly owned by Puget Sound Energy and TalenEnergy Corp. Units 3 and 4, built in the mid-1980s, are also owned bymultiple companies. Talen and Puget Sound Energy share ownership of unit 3 withPortland General Electric Co.,Avista Corp. and utilityPacifiCorp. Unit 4 isowned by Puget Sound Energy, Portland General, Avista, PacifiCorp and subsidiary .

The bill easilypassed the Legislature and had the support of Puget Sound Energy.

In drumming up support for the bill in March, state Rep. Jeff Morris said the bill wouldkeep money collected for decommissioning and remediation of the units from being"swept" by future utility commission for other purposes like keeping rateslow.

Someelected officials from Montana, however, have taken a different stance on the bill,fearing it will lead to shutdown of the units.

Uponhearing of Inslee's plans to sign the bill, U.S. Sen. Steve Daines, R-Mont., saidapproval of the bill "paves the way for the eventual closure of two units ofColstrip putting Montanans out of jobs and raising energy costs for families."

U.S.Rep. Ryan Zinke, R-Mont., said Inslee's action will "single-handedly be responsiblefor middle-class families losing their jobs."

MontanaGov. Steve Bullock had asked Inslee to veto the bill.

Insleesaid he spoke with Bullock about the bill, telling the Montana governor that itis needed to protect Washington ratepayers. Inslee also said no decision has beenmade about when the Colstrip units might close.

"Thecommission must conduct a proceeding and develop a thorough record, before theycan approve any closure decision," Inslee said. "At the request of PugetSound Energy and others, the commission has postponed the start of those proceedingsuntil next year."

Insleesaid he encouraged Montana's participation in UTC proceedings involving closureof the units.