Proposed Puget Sound Energy Rate Case Provides Funds for Colstrip Transition

(The NW Energy Coalition along with Renewable Northwest released the following statement today in response to the filing of a proposed settlement in the Puget Sound Energy rate case at the Washington Utilities and Transportation Commission.) 

200px-ColstripplantsSEATTLE, Wash. — A diverse group of parties has reached a proposed settlement in the Puget Sound Energy (PSE) rate case that represents an important step toward a clean energy future in the Northwest.

The settlement, which has yet to be approved by the Washington Utilities and Transportation Commission, sets forth a plan to address underrecovered costs stemming from operations of the Colstrip Power Plant in Montana and provides funds for the eventual closure and clean up of the plant’s four coal-fired generating units. The settlement also provides $10 million in transitional funding for the community of Colstrip, which is expected to experience significant economic consequences as a result of the plant’s closure.

At the urging of the NW Energy Coalition, the Natural Resources Defense Council, Renewable Northwest, who were represented in the case by Earth Justice, and the Sierra Club, PSE committed in the agreement to work with local and regional stakeholders to develop a community transition plan that will determine how the $10 million can be used most effectively.

The need for transition planning in Colstrip is pressing because two of the plant’s four generating units are scheduled to close no later than 2022. The proposed agreement provides for costs from the remaining two units to be fully recovered by the end of 2027.

Fortunately, PSE and the community of Colstrip have a model for community transition to which they can turn for guidance. In 2011, TransAlta USA reached agreement with public interest stakeholders and the State of Washington for the closure of its coal-fired power plant in Centralia, Washington. That agreement created the Centralia Coal Transition Fund program that provides money for worker transition, clean energy, and community development.

Nancy Hirsh, NW Energy Coalition executive director and board member of the TransAlta Centralia Board Funding, which administers the grants, said, “While the transition to a clean energy economy is good and necessary, we can’t lose sight of people and communities that might need help through the process. In Centralia, we built a community transition model that works. So, I’m thrilled that PSE is ready to participate in a similar effort to help Colstrip.”

Wendy Gerlitz, NW Energy Coalition policy director, noted that PSE is just one of five utilities that own pieces of Colstrip. “We hope the other owners will follow PSE’s lead and add funding to the community transition effort.”

Gerlitz also pointed out that the proposed rate case settlement doesn’t only help the town of Colstrip. “PSE customers will also do well if this agreement is approved, “ said Gerlitz citing agreement’s revenue provisions.

“Under the agreement, PSE revenue from electricity would increase by just one percent and its revenue from natural gas will actually drop by approximately 4 percent,” Gerlitz pointed out. “The settlement compensates for many years when operating costs for the Colstrip units were not fully recovered. To do so now at such an affordable rate is a better outcome than many of us could have imagined. Plus, going forward, the agreement establishes a regular reporting process that should assure that revenue collected from customers and costs stay aligned.”

At the urging of the Energy Project, low-income PSE customers will also benefit from additional funding for bill assistance and energy efficiency programs including an investment of $2 million in home weatherization for low-income people.

Another provision of the settlement could help economic development in eastern Montana, while improving PSE customers’ access to clean and affordable wind energy. The retirement of the coal-fired units at Colstrip will free up transmission capacity that could be used to send electricity from Montana wind farms to metropolitan areas west of the Cascades.

“Under the settlement, PSE will pursue a dialogue with Montana renewable energy companies, transmission providers and regulators to ensure the transmission continues to be utilized for customer benefit,” said Rachel Shimshak, executive director of Renewable Northwest. “It seems obvious that a component of eastern Montana’s economic transition should come from replacing the retiring generation with the new clean generating resources that customers want. But there are many technical questions to be addressed in order to make this transition possible. I am pleased this settlement provides a process for answering those questions.”

Not all issues in the rate case are settled in this agreement. The NW Energy Coalition will continue questions relating to rate design and structure, which were not resolved.

The settlement will be presented before the Commission, which can choose to accept, reject or modify the agreement. If accepted the agreement requests an effective date of December 13, 2017.

Other parties to the settlement include Industrial Customers of Northwest Utilities, The Kroger Co., Northwest Industrial Gas Users, Sierra Club, Renewable Northwest, Natural Resources Defense Council, the State of Montana, the Energy Project, and federal executive agencies.