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Utilities Must Partner In Coal Community Transition

NRDC Expert Blog by Amanda Levin & Noah Long 

The electric industry is changing rapidly. Inexpensive natural gas and rapidly burgeoning renewable energy are making coal plants around the country uneconomic. Coal plants are closing all around the country. Last year, the massive four-unit coal plant in Colstrip Montana joined the growing list of coal plants headed toward retirement.

In response, the Washington utility commission recently approved a settlement supporting a planning and transition process for Colstrip. Puget had already committed to close two of the four units (of which it owns a 50% share). In this new order, the Commission ordered Puget Sound Energy to begin a transition planning and assistance stakeholder process.  In addition, Puget Sound Energy will pay $10 million dollars—half from customers, half from shareholders—to transition planning and assistance. We support the settlement in the Puget Sound Energy rate case because it will start the process of the utility, the State of Montana, the community, and other stakeholders to begin to plan for the coming transition and begin to discuss ways to assist the community in making that transition.

This is just the beginning of a long road. The closure of the last Colstrip units is still probably several years off. The cleanup will take decades. We fully expect the other owners of the plant to eventually engage with Puget Sound Energy the transition planning process.  Hopefully, one of the things that they will explore is opportunities for clean energy resources to replace Colstrip generation.

This same case also included two other wins for clean energy and the environment. First, the Commission approved the continuation of Puget Sound’s decoupling mechanism. Decoupling breaks the link between energy sales and utility profit, removing the utility’s disincentive to promote energy efficiency and conservation. Puget Sound has already completed a three-year decoupling pilot, which a third-party evaluation concluded had a net beneficial impact for consumers, the utility, and conservation.

 Second, the Commission rejected Puget Sound’s request to increase the monthly customer charge for residential electric customers. Lower fixed charges helps keep energy bills affordable for low-income and fixed-income households in Washington. It also promotes smart, efficient energy behaviors—when the non-bypassable fixed charge is increased, the utility can reduce the volumetric rate (cents per kilowatt‐hour). By reducing the value of a kilowatt‐hour saved or self-generated, a higher fixed charge directly reduces the incentive for customers to invest in energy efficiency or rooftop solar.

What does transition mean for Colstrip?

The small city of Colstrip, Montana, as the name suggests, exists because of its nearby coal deposits. In the mid-1970s and then again in the mid-1980s, a total of four coal units were built by a Montana utility and consortium of utilities in the northwest. Now, the handwriting is on the wall. The owners of the two older units—Puget Sound Energy owns 50 percent of the units—are required to shut them down by 2022. And, given the changes in the industry and the age of the two “newer” units, to say nothing about the preferences of customers in the northwest for clean energy, it is difficult to imagine a future for those units longer than about another decade.

Colstrip, in very rural eastern Montana, with a population of a little more than 2,000 that has grown up around and depends entirely upon coal mining and coal-fired electricity generation. Its future is highly uncertain unless proactive steps for a new economy are taken.

These transformations, like all economic changes, has an impact on those whose lives have been devoted to production and generation of coal power. NRDC believes utilities and customers have an obligation to these people and communities—to make sure that technological improvement lifts all Americans. To support this end: NRDC, partnering with other clean energy groups, intervened in the Puget Sound Energy general rate case in Washington state to advocate for community transition planning and assistance for Colstrip.

NRDC and its co-intervenors took the position that an obligation existed, to ameliorate impacts to Colstrip and its citizens from the closing the plant—and to plan for a very different economic future.

Utilities that have relied on coal have an obligation to support economic transition. In the case of Colstrip, Puget Sound Energy and its customers have, over multiple decades, utilized the area’s natural resources and workforce to run the Colstrip units and in so doing economically advantage its company and its customers. 

Our position in the rate case was that, having been a part of the community for so long, Puget Sound Energy had an obligation to assist Colstrip in its transition away from coal as the centerpiece of the local economy. We further believed that the resource intensive nature of coal mining and electric generation and the local pollution and diminution of resource values associated with those activities made the fulfillment of this obligation even more imperative. We also believe that businesses should be good corporate citizens. American business enterprises have benefitted greatly from the advantages bestowed upon them by an educated citizenry, a market economy, and a stable society and so, for their own sake and for the common good, business should work to ensure that those conditions continue to exist.

Governments, too, have a responsibility to work with communities and workers in situations of economic upheaval. Right now, Colstrip, Montana is a well-functioning community and the State has a vital interest in ensuring it stays that way. Finally, and obviously, individuals, i.e., the citizens of Colstrip, the workers at the plants and at the mine, also have a role- and will have to take the lead in establishing a new path for the city.

The future is here, it’s time to act.

Coal generation is not only economic, it’s bad for public health or for the environment. Climate change is, as we are seeing again and again, imposing real hardships and costs on human beings across the globe. Those effects will continue to increase in severity. We need to get off fossil fuels. But, it’s important to remember that coal miners, the labor force of coal plants, and folks that live in coal communities are just like the rest of us. They are trying to make a living, putting their kids through school, taking care of aging parents. In our haste to rework our energy system we must not forget the people who have built their lives around this part of our economy.

Furthermore, we make getting off of coal that much more difficult if we do not address the concerns of those who directly make a living from the use of coal. Transition planning and assistance for coal-dependent communities is not just the right thing to do, it is the smart thing to do.

This blog was co-authored by Chuck Magraw

Republished with permission from the Natural Resources Defense Council's expert blogs

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