The Colstrip Power Plant, a four-unit, 2,094-MW coal-fired station positioned about 100 miles east of Billings, Montana, may see its coal provide contract nullified because of Westmoreland Coal Co.’s Chapter 11 chapter reorganization.
Westmoreland operates the 25,000-acre Rosebud coal mine, amongst others. Rosebud is adjoining to the Colstrip plant and provides nearly all of its manufacturing to the station. According to Westmoreland, that quantities to about 10 million to 13 million tons per yr.
Westmoreland filed for chapter on Oct. 9, 2018. Earlier this month, the corporate solicited affords for the acquisition of considerably all of its property, however no certified bids have been acquired, apart from the minimal bid from its collectors.
Coal mining operations have been arduous hit by shrinking demand from the ability technology business. According to the U.S. Energy Information Administration, coal manufacturing has fallen by greater than one-third since 2008 when manufacturing peaked. The variety of lively coal mines has decreased by greater than half, from 1,435 mines in 2008 to 671 mines in 2017. However, a lot of the mine closures have been within the Appalachian area, not within the Powder River Basin (southeast Montana and northeast Wyoming) the place giant floor mines account for greater than 40% of whole U.S. manufacturing.
The Colstrip plant employs about 360 folks and is operated by Talen Montana LLC. The facility is co-owned by Talen, Puget Sound Energy Inc. (PSE), Portland General Electric Co., Avista Corp., PacifiCorp, and NorthWestern Energy.
Talen filed an objection with the chapter court docket on Jan. 25 over Westmoreland’s Chapter 11 plan, which might nullify Colstrip’s gas contracts. The doc says Westmoreland is making an attempt to “squeeze” the plant “for larger and larger earnings.” According to the submitting, the present gas contracts “assure” profitability for Westmoreland as a result of they’re cost-plus agreements below which the plant pays the annual prices of mining operations, a return on capital funding, and a per-ton revenue payment.
The Billings Gazette reported that NorthWestern Energy informed the chapter court docket, “If the Court permits [Westmoreland] to reject the Coal Supply Agreement, the Colstrip Complex will stop operation, and the Units will shut down and stop producing electrical energy in the midst of the Montana winter. The Colstrip Co-Owners won’t be able to exchange the coal provide immediately, and the models will shut.”
“The Rosebud Mine is the one viable supply of gas for the Colstrip models,” PSE’s Grant Ringel was quoted to have stated. “The Colstrip models are below sturdy financial stress from different sources of electrical technology, particularly pure fuel. Anything that raises prices for Colstrip additional weakens their competitiveness,” Ringel reportedly stated.
The Colstrip plant has been working below monetary stress for a while. Talen and PSE, that are joint house owners of Units 1 and a couple of, reached an settlement in July 2016 to retire the 2 models by July 2022. Although the deal was made to settle a lawsuit alleging violations of the Clean Air Act, PSE President and CEO Kimberly Harris alluded to troublesome economics when she stated on the time, “This settlement supplies certainty for addressing grievous air pollution points and offers the 2 models six years to go offline, though the market could show much less tolerant of that size of time.” A Talen lobbyist in March 2017 informed state legislators that the plant was dropping about $30 million yearly.
“Westmoreland’s most up-to-date supply to the Colstrip house owners would very probably make operation of Colstrip Units three and four uneconomic for not solely Talen Montana however the entire fellow Colstrip house owners,” Talen Energy’s Taryne Williams was quoted by the Gazette as saying. “Additionally, whereas at the moment, there was no determination to close down Units 1 and a couple of prior…