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Does Puget Sound Energy need 20 more years of relying on coal?

A coal-powered energy plan in Colstrip, Montana Credit: ambimb

Puget Sound Energy’s appetite for burning coal has been a target of the Sierra Club’s “Beyond Coal” campaign since the spring of 2012 when the group announced a new push to get the state’s largest private utility to stop buying power from the coal-fired Colstrip Generating Station in Montana. In March of this year the club and Montana Environmental Information Center sued PSE in federal court over alleged violations of the Clean Air Act. PSE generates 30 percent of its power from Colstrip, one of the biggest greenhouse gas emitters in the West. 

Last week, the Sierra Club, MEIC and some PSE customers business leaders told the state’s Utility and Transportation Commission that they want changes to the utility's Integrated Resource Plan, which includes burning coal for another 20 years. They raised concerns about greenhouse gas emissions from coal and public health, climate change and financial risks. PSE’s plan has received more than 3,000 comments with nearly all opposed to the plan, according to the commission.

Puget Sound Energy points to its extensive use of clean energy, including one of the largest wind-power programs in the country. But it says coal continues to make sense for the utility and its customers as part of its portfolio of energy sources.  

Anne Hedges, executive director of the Montana Environmental Information Commission, testified at the hearing, “Coal is the dirtiest way to generate electricity. It results in massive emissions of air pollutants harmful to public health, including sulfur dioxide, nitrogen oxide, mercury and fine particulates that lodge deep in the lungs.”

“It’s the commission’s obligation”, stated Hedges, “to look out for consumers not only in Puget Sound, but at the impacts coal has on the world around us and start planning for a cleaner more affordable future.” 

By law the Utility and Transportation Commission can’t determine if a particular resource plan is prudent, according to communications manager Marilyn Meehan. But it can provide comments on whether the plan is “deficient or in need of more analysis.”

Puget Sound Energy’s power-generation portfolio includes wind, hydro, energy efficiency and natural gas as well as coal. But the reliance on coal for 30 percent of its energy, says the Sierra Club’s Doug Howell, misses an opportunity to expand clean energy.

The strategy also contains three major flaws, he says. “There’s been a massive leaking of toxics in the groundwater that have not been accounted for," Howell says. He also points to higher costs as coal mining shifts to the Powder River Basin, which will require huge transportation costs and new rail infrastructure. The biggest concern is about climate change: Coal is the most carbon-intensive fossil fuel and comes with serious environmental and public health costs, he says. “These costs need to be calculated as economic costs”, says Howell, a common refrain heard throughout testimony to the commission.

Puget Sound Energy’s current resource plan maps out various market scenarios in terms of cost and environmental compliance. “But the final recommendation”, says Howell “doesn’t anticipate any climate regulation for the next 20 years. Nobody believes that. A tax on carbon could cost the utility billions. The problem is we haven’t translated these environmental costs into dollars.” 

Gov. Jay Inslee’s Climate and Legislative Workgroup is investigating how carbon taxes might be implemented to meet the state’s emission limits but won’t make recommendations until the end of the year. This week, the U.S. Supreme Court agreed to review EPA global warming rules aimed at cutting power plant and factory emissions of gases blamed for global warming. Coal plants like Colstrip, which has four generating facilities, also face potentially costly liabilities that stem from regulations to protect public health,  "regional haze" rules to protect air quality in scenic areas and new rules governing mercury and air toxics as well as coal ash treatment. But the federal lawsuit filed by the Sierra Club and others earlier this year over the Colstrip plant may not be ruled on until 2015.

When Puget Sound Energy is asked about burning coal at Montana’s Colstrip mines, it replies by touting its clean energy record.  “We had two wind plants before they were required by state law and have the second largest amount of wind power in the nation," says Andy Wappler, vice president of corporate affairs "We have energy efficiency programs and for more than a hundred years we’ve had hydro, if you include that as clean energy."

He says the long-term resource plan under state review looks at cost, market conditions and potential changes to environmental laws. “Right now, the economics show coal is a viable part of the portfolio for the foreseeable future,” he says. If carbon becomes a “significant cost," he adds, Puget Sound Energy will change decisions about what plants are in the portfolio.

“One aspect that’s been missing from some of the outside analysis of this,” Wappler says “is that if future costs become a burden on our customers and become something where there’s a better alternative, that’s what we’ll do. In fact that’s what regulations require us to do because when we make an investment, regulators ask for our reasoning and our documentation.”

For now, those anxious for PSE’s coal burning days to be over are waiting to see what the Utility and Transportation Commission does. Utility Chairman Danner said that while the UTC is historically an economic regulator, the law governing PSE’s Integrated Resource Plan makes clear that the term “lowest reasonable cost” includes consideration of “the cost of risks associated with environmental effects including emissions of carbon dioxide.” The commission is expected to make a decision within 60 days. 

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