Colstrip Owner Pushes for Tax Break to Keep Plant Units Open

Republican leader says the units could close within the year without some form of assistance

By MATT VOLZ & MATTHEW BROWN, Associated PressAssociated Press

HELENA – Talen Energy is pushing Montana lawmakers for a tax break worth millions to keep two units of the coal-fired Colstrip power plant open, with one Republican leader saying Tuesday the units could close within the year without some form of assistance.

House Speaker Austin Knudsen, R-Culbertson, said the $10 million coal severance tax reduction proposed by the company isn’t likely in a tight budget year. But he and state Sen. Duane Ankney, R-Colstrip, said talks are continuing to look for a solution to keep Talen from shutting two of the four Colstrip units down early.

“If the parties can’t figure something out, I think they probably will close within the year,” Knudsen said. “I think it’s real.”

Colstrip is the second-largest coal-fired power plant in the West and a major economic driver in southeastern Montana. But in recent years, the plant has been beset by decreased demand, increased regulation and lawsuits.

A legal settlement last year requires the two older Colstrip units, which were built in the 1970s and are owned by Talen and Puget Sound Energy, to close by July 2022. The two newer units, which are owned by Talen, Puget Sound and four other companies, would not be affected.

Talen is the operator of the plant, but it is seeking to exit from that role by next year.

The problem now is keeping the two older units running until 2022, Ankney said. The idea of a $10 million tax break isn’t feasible when the state Legislature is focused on shoring up a budget shortfall, and it could cause legal problems if the of other companies aren’t also reduced, but another solution has not yet been found, he said.

“We’re still looking,” Ankney said. “They can’t take revenue out of this stream right now.”

Knudsen said several proposals are floating around, and the matter is being given a high priority because the owners of the two Colstrip units are losing money. Talen was recently bought by Riverstone Holdings, and the new owners appear to be genuinely interested in finding a solution, he said.

“We’ve been trying to figure out what’s real, what’s posturing, what are the issues, who are all the players and what, if anything, can the state do to help keep this thing open,” Knudsen said.

Spokesmen for Talen Energy and Puget Sound did not immediately respond to a request for comment.

Environmental advocate Anne Hedges said it would be a “slippery slope” to give Talen any kind of bailout and the state should instead look for clean energy businesses that could fill the gap when the shutdown occurs.

“Regardless of the amount of money that is necessary to give to Talen to keep the plant open, that money is better spent attracting new businesses to the area that will be in it for the long run,” said Hedges, a lobbyist with the Montana Environmental Information Center.