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Matt Nykiel: Do Avista customers face Colstrip risk?

The sudden announcement that a local utility, as old as the city of Spokane itself, could soon be owned and operated by a larger Canadian firm has raised questions throughout the Inland Northwest. Avista Utility’s shareholders may be making a pretty penny, but what of Eastern Washington and North Idaho families bearing the brunt of rate increases in recent years?

Utility regulators in Washington and Idaho, as well as across the border in Canada, will soon weigh in on whether Hydro One’s purchase of Avista is good for local consumers. One of the items regulators will be examining is a skeleton in Avista’s fiscal closet: the unaccounted-for cleanup and debt costs for the rapidly aging and economically uncompetitive Colstrip coal plant in Eastern Montana.

Any financial planner would advise against taking out a 20-year loan to pay for something you don’t expect to last 10 years. Unfortunately this is essentially Avista’s approach in its most recent long-term plans for Colstrip Units 3 and 4, where it has a 15 percent stake.

Coal plants across the West are being phased out, as the falling cost of cleaner alternatives such as wind and solar makes coal a risky proposition. The two oldest units at Colstrip, Units 1 and 2, are scheduled to retire by 2022. The North Valmy Plant in Nevada, which serves Idaho Power and is the same age as Avista’s Colstrip Units 3 and 4, is also on a retirement schedule. Idaho Power noted that “it may not benefit customers from an economic and electric reliability perspective to operate the facility beyond 2025.”

The other utilities that share ownership of Units 3 and 4 with Avista see the writing on the wall and are inching toward the exit. Oregon state law requires that Portland General Electric be out of the coal business by 2030. More than half of Puget Sound Energy’s customer base has committed to being off coal by 2025. Talen Energy, which operates the plant, recently told the state of Montana that the company “is losing tens of millions of dollars a year. It cannot continue to do that and it will not.”

Avista, on the other hand, operates under the assumption that Colstrip will continue to operate beyond 2037, which flies in the face of energy trends across the West and the actions of the rest of Colstrip owners, who are getting ready for transition.

What’s motivating Colstrip’s owners to look for exit strategies? The cost of cleaning up after decades of dumping mercury and other toxins into the local aquifer is mounting. Puget Sound Energy estimated its share of cleanup to be up to $200 million for just half the Colstrip Units 1 and 2 and began the process of setting aside money for that looming expense. Avista, which has yet to set aside a cent, continues to whistle past the graveyard, pretending the problem will take care of itself.

That’s not just Montana’s problem. Eastern Washington and North Idaho families, and their children, could very well be paying for that cleanup long into the future. If Colstrip were to suddenly close because one of its owners withdrew, Avista customers would suffer the double burden of having to pay for an inoperable coal plant for decades to come and the cost of replacement power.

That’s not fiscal responsibility, that’s passing the buck to the next generation to deal with the mistakes of this generation. Avista owes it to its customers to recognize the reality of the Western energy markets and start a real conversation about how to transition off coal and to cheaper, cleaner alternatives. Operating in a fantasy world where Colstrip keeps providing power for two more decades leaves this region’s families at financial risk.

Matt Nykiel, of Sandpoint, is a conservation associate with the Idaho Conservation League.

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