A key transfer of Colstrip shares, considered critical to extending the life of one of the West’s largest coal-fired power plants, is no more.
Colstrip Power Plant co-owner and operator Talen Energy has informed shareholders its agreement to acquire 370 megawatts of Colstrip generation from Puget Sound Energy has fallen through.
The agreement hinged on Talen getting approval from the judge overseeing its 2022 bankruptcy.
“In February 2024, Puget Sound informed Talen Montana that it was in breach of the agreement for failing to obtain Bankruptcy Court approval and that the agreement is unenforceable,” Talen said in its annual report to investors. “Talen Montana has agreed that the agreement is unenforceable and disputed that it breached the agreement.”
The Colstrip Power Plant is pictured here.
Talen, a Texas-based energy company that sells its 15% share of Colstrip power to wholesale buyers, indicated that it continues to look for ways to acquire Puget’s shares.
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The agreement would have made Talen Colstrip’s largest shareholder at 592 MW, and given it more voting power on major decisions like, maintenance, operations, and whether to shut down the power plant. Those have become increasingly contentious as Puget and other Pacific Northwest utilities make plans to abandon coal power in order to comply with climate change laws in Washington and Oregon. Votes are weighted by Colstrip share size.
Puget and Spokane-based Avista Corp will exit Colstrip in 2025. Oregon utilities PacifiCorp and Portland General Electric depart in 2029. Combined, the four utilities own 70% of the 1,480-MW southeast Montana power plant.
Avoiding a messy ‘divorce’
As exit dates approach, voting on costly maintenance and repairs has become increasingly contentious, with exiting owners not wanting to pay for repairs that will outlast their tenure. Talen and NorthWestern Energy, which has 400,000 metered customers in Montana, have shown the most interest in keeping Colstrip running.
Montana legislators, passing laws in 2021 to force Colstrip repairs, likened the deteriorating relations among the power plant’s owners to a bad divorce.
“Instead of being civil about it and walking away and doing their fair share to keep the property in good condition, it’s like they’re trashing the facility on the way out,” said Sen. Steve Fitzpatrick, Great Falls Republican. “So, to take our divorce analogy, what they’re doing is trashing the house and keying the car on their way out the door. That’s what’s going on here and it’s just wrong.”
The state laws passed in 2021 and signed by Gov. Gerg Gianforte, dictated arbitration terms and empowered Montana’s attorney general to order repairs and impose $100,000 a day fees for noncompliant owners. A federal court ruled the laws unconstitutional, after which Montana paid the $825,000 attorney’s fees of the exiting owners.
Republicans had celebrated the share transfers between Puget and Talen, and Avista and NorthWestern as a way around the “messy divorce” that occupied the 2021 Legislature. Legislators contacted by Lee Montana newspapers at the end of April said they had no idea Puget’s share transfer with Talen was in trouble.
The unraveling of the September 2022 agreement comes as Colstrip owners face an expensive decision about whether to comply with new federal Mercury and Air Toxics Standards, or MATS. According to owners Talen and NorthWestern, Colstrip cannot comply with the new rule without adding emissions controls.
Talen tells EPA the emissions upgrade will cost more than $600 million, a price the power plant operator doesn’t know whether…
Read More: Colstrip ownership plan unravels on bankruptcy problems.