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Plant owners say new law interferes in Colstrip contract

May 4, 2021 GMT

BILLINGS, Mont. (AP) — The majority owners of a coal-fired power plant in southern Montana filed a federal lawsuit Tuesday alleging a bill signed by Gov. Greg Gianforte unconstitutionally interferes with a private business contract that has governed the operation of the Colstrip power plant for 40 years.

Gianforte, a Republican, described the new law and a second measure affecting Colstrip as retaliation against Washington clean energy laws that have imposed an upcoming ban on coal power in that state over climate change concerns.

Four owners of the Colstrip power plant do business in Washington, where most of the plant’s energy is consumed. In 2019, the Washington legislature passed a bill to ban the use of coal-generated power in the state by the end of 2025.

“Affordable power generated in Colstrip helped build Seattle’s big tech economy, but now woke, overzealous regulators in Washington state are punishing the people of Colstrip with their anti-coal agenda,” Gianforte said in a statement after he signed the bills on Monday.

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Oregon has a similar ban on coal power beginning in 2030, so some of the power plant owners have been reluctant to spend money on repairs that aren’t necessary to keep the plant running past 2025, The Billings Gazette reported.

Puget Sound Energy, Avista Corp., Portland General Electric and PacificCorp together own 70% of the power plant. Talen Montana and NorthWestern Energy, who do not face coal-power bans, own the rest.

In February, NorthWestern Energy sought to have the owners negotiate over whether a majority vote or unanimous vote was required to determine the obligations of each owner to fund operations and what vote was needed to close the power plant. NorthWestern and Talen Montana argue a unanimous vote is needed to close the plant or even one of the two remaining generating units, according to the lawsuit filed by the majority owners.

When the parties did not reach a negotiated settlement, NorthWestern sought arbitration. Talen proposed that it involve three arbitrators and take place in Montana with Montana courts having jurisdiction.

On April 13, Puget Sound Energy and other out-of-state owners filed a petition to compel arbitration before one arbitrator in Spokane, Washington, as required under the operating contract. On the same day, the Montana Legislature passed the bill that, in effect, would require the arbitration to take place in the manner sought by NorthWestern and Talen.

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Puget Sound Energy and the plant’s other out-of-state owners filed a lawsuit in U.S. District Court in Billings on Tuesday seeking to declare the arbitration law unconstitutional. The lawsuit names Talen and NorthWestern as defendants. Both companies lobbied in favor of the bill.

“The state of Montana is unconstitutionally interfering into a longstanding, private business contract,” Puget Sound Energy’s general counsel Steve Secrist said in a statement. “This is both illegal and detrimental to finding constructive, long-term solutions regarding Colstrip.”

Under a new maintenance law signed by Gianforte, if a company refuses to share in the operating costs or takes actions that bring about the closure of a facility without obtaining the consent of all the co-owners, it would be considered an “unfair or deceptive trade practice” and Montana’s attorney general could issue fines of up to $100,000 per day.

Puget Sound Energy notes it has provided $10 million to aid the community of Colstrip to plan for economic changes because of companies leaving their ownership of the power plant.

Repairs are currently being done on two units at the power plant, the Gazette reports. Unit 3 has been down since April 13, and Unit 4 was down for eight days starting on April 21. The two older units of the power plant have been permanently shut down.