Operator Reverses Course, Will Keep Running Montana Coal Plant

The operator of one of the largest coal-fired power plants in the Western U.S. will continue to run the facility, changing course about a year after a company executive said the plant was not economically viable.

A spokesman for Talen Energy confirmed to POWER on August 9 that the company will continue to operate the 2,094-MW Colstrip Generating Station in Montana. The company last year told the ownership group it would need to find a new operator by mid-2018.

Todd Martin, a spokesman for Talen, told POWER in an email: “I can confirm that the ownership group has determined that Talen Montana will continue to operate the Colstrip Station.” He said the company would have “no additional public information to share at this time.”

The Billings (Mont.) Gazette first reported August 9 that Colstrip would remain open, based on its interviews in the past week with representatives of the six utilities that co-own the plant.

Montana legislators earlier this year approved a deal that would allow Pennsylvania-based Talen to borrow up to $10 million a year to keep the plant operating until 2022. Talen executives last year said the plant was not economical, and a lobbyist for the company in March of this year told the state legislature the plant was losing about $30 million annually. However, a spokesman for the Montana Board of Investments said the company has not sought any money and has not contacted the agency since Montana Gov. Steve Bullock (D) signed the loan agreement in May.

The plant’s owners in July 2016 said they would close two of Colstrip’s four coal-fired units in mid-2022 to settle a lawsuit that alleged the plant violated the Clean Air Act. Gov. Bullock at the time said the state’s Office of Economic Development would work to find a way to “keep energy flowing out of Colstrip and harness the energy jobs of the future,” and said his office had talked with the U.S. Department of Energy (DOE) about “investments that could be made in Montana.” The Colstrip plant and the adjacent Rosebud Mine, which supplies the plant with coal, together employ about 800 workers.

The Montana Environmental Information Center and the Sierra Club sued the plant’s owners in federal court in 2013. The groups claimed the owners had not installed required equipment to reduce air pollution emitted by the plants.

Talen Energy is an independent power producer with most of its plants in Texas and the U.S. Northeast. The company has a half-ownership stake in units 1 and 2 at Colstrip; Puget Sound Energy owns the other half. Talen is paid by the other stakeholders of Colstrip—NorthWestern Energy, Avista Corp., PacifiCorp, and Portland General Electric, who together own units 3 and 4—to operate the entire plant.

Talen in May 2016 told the other stakeholders the plant would need a new operator no later than May 23, 2018, or Talen would end its operation. The company’s CEO at the time, Paul Farr, said the company would lose “millions of dollars” operating the plant through the second half of 2016. He said abundant natural gas had moved electricity market prices so low that producers such as Talen had difficulty competing on the spot market.

Talen Energy last fall was sold to Riverstone Holdings LLC, a New York-based private equity firm that focuses on buyouts and investments in the energy and power sectors. Riverstone took the company private, and a spokesman for Puget Sound Energy said the new management asked the other owners of Colstrip to “rescind their notice” to close the plant.

Colstrip units 1 and 2 opened in the mid-1970s and together have 614 MW of capacity. Units 3 and 4 opened in the mid-1980s and have a combined capacity of 1,480 MW.

—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)