Montana considers keeping coal-fired plant afloat with loans

By Matt Volz, Associated Press

Montana lawmakers are considering propping up a troubled coal-fired power plant by offering low-interest loans of up to $10 million a year from the state's $1 billion coal tax trust fund to one of the plant's owners.

Montana Rep. Jim Keane, D-Butte, left, and State Sen. Duane Ankney, R-Colstrip, discuss a legislation package to keep the Colstrip power plant open until July 2022 in Helena, Mont., Friday, March 10, 2017. Montana lawmakers are considering propping up a troubled coal-fired power plant by offering low-interest loans of up to $10 million a year from the state's $1 billion coal tax trust fund to one of the plant's owners. Talen Energy, which owns 50 percent of the two Colstrip power plant units slated for closure by July 2022, has warned that the shutdown could come sooner if it does not receive tax relief or state assistance. Colstrip is the second-largest coal-fired power plant in the West, and a major economic driver for eastern Montana. But coal-fired electricity has been under pressure by low market prices, increased regulation and lawsuits over pollution. (AP Photo/Matt Volz)

HELENA, Mont. (AP) — Montana lawmakers are considering propping up a troubled coal-fired power plant by offering low-interest loans of up to $10 million a year from the state's $1 billion coal tax trust fund to one of the plant's owners.

Talen Energy, which owns 50 percent of the two Colstrip power plant units slated for closure by July 2022, has warned that the shutdown could come sooner if it does not receive tax relief or state assistance.

The bill that will be introduced by Monday would allow Talen to borrow up to $10 million a year from the coal tax trust fund.

The bill, which will be sponsored by House Speaker Austin Knudsen, R-Culbertson, says the state Board of Investments can lend the money to Talen "to finance the everyday operations and required maintenance" of the Colstrip units.

Knudsen said he doesn't consider the measure a bailout and he doesn't believe that loaning the money to Talen is risky, given the company's statement that it is losing millions of dollars.

"We're sitting on $1 billion in the coal trust. We can afford to make a nominal loan out of it," he said. "This is an extraordinary circumstance. We've got a town that is literally on the brink here."

Talen spokesman Todd Martin did not return a call for comment. State Sen. Duane Ankney, R-Colstrip, said the company was not involved in drafting the measure or two accompanying measures requiring decommissioning and cleanup plans for the shutdown.

Anne Hedges, the deputy director of the Montana Environmental Information Center, called the bill "wrongheaded." The state should first ensure that Talen will pay for its existing obligations, such as cleaning up the polluted site and paying its workers' pensions, before it gives the company money, she said.

"It's setting a really bad precedent for loaning state money to private companies," Hedges said. "Nobody else has this opportunity for these low-interest loans to operate their businesses."

State Rep. Jim Keane, D-Colstrip, said the closure of the two Colstrip units will mean an annual loss of $7.2 million to the state in tax revenue, plus another $5 million to the town of Colstrip and Rosbud County and nearly $3 million to the coal trust fund and other state programs.

"People need to get a clue just how devastating this is going to be to the state of Montana," Keane said.

Gov. Steve Bullock's office was not involved in drafting the bill. Spokeswoman Ronja Abel declined to comment on whether the Democratic governor backs the measure.

"Governor Bullock will take a close look at any legislation that makes it to his desk," Abel said in a statement. "He remains committed to finding a made-in-Montana solution that protects the workers in Colstrip and ensures the economic strength of the community."

The bill is part of a new legislation package designed to keep the Colstrip plant's two older units running and to require the owners to come up with decommissioning and remediation plans that would protect the state's interests when they are shuttered.

In those plans, Talen and the other co-owner, Puget Sound Energy, would have to account for the cost of not only tearing down the plant and cleaning the site, but also for the loss of home and business property values, workforce programs and lost state and local revenue.

Colstrip is the second-largest coal-fired power plant in the West, and a major economic driver for eastern Montana. But coal-fired electricity has been under pressure by low market prices, increased regulation and lawsuits over pollution.

Two of the four Colstrip units are required to close by July 1, 2022, under a settlement in a lawsuit brought against the plant by two environmental groups, including Hedges' Montana Environmental Information Center. The closure will mean the loss of more than 200 jobs at the plant and at the coal mine that supplies it, Talen lobbyist John Metropoulos testified in January.

"The workers, the city, the state were all left out of that agreement," Ankney said of the legal settlement. "They wanted to close the plants and that's it, put the workers out on the street. And that's not right."

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