Bellevue, WA-based Puget Sound Energy (PSE) bought itself a reduced-carbon fuel mix by selling its 185 MW interest in Colstrip coal-fired Unit 4 in Montana to the state’s largest private sector utility, NorthWestern Energy. The price was $1 in a unique deal.
Both utilities are viewing the transaction as helping their transitions to a more carbon-free power marketplace. PSE gave up its 25% share in Unit 4 in return for having a five-year supply of 90 MW from NorthWestern’s newly acquired share. The deal is subject to regulatory approvals in both states.
Mandated by a Washington law to be coal-free by 2025, PSE officials said the combination utility plans to eliminate at least half of the coal-fired generation in its portfolio years ahead of schedule.
PSE is scheduled to drop another 307 MW of coal-fired generation in its interests in Colstrip Units 1 and 2 in January when its deal with co-owner Talen Energy closes. PSE would remain one of five owners of 185 MW Colstrip Unit 3.
PSE would stick by the citizens of Colstrip, earmarking $10 million for a community fund and remaining in the area “for years through the decommissioning and remediation work,” said PSE’s Ron Roberts, director of generation and natural gas storage.
NorthWestern CEO Bob Rowe, Montana’s former chief regulator, said the utility is fulfilling a dual responsibility to safeguard energy reliability and the environment. “Right now our state faces an urgent capacity shortage -- energy that’s available 24/7, 365 days a year -- regardless of the weather,” Rowe said.
The deal allows NorthWestern to acquire a majority interest (55%) in Unit 4, giving it more control over the future of the home-grown generation source. Early next year, NorthWestern plans to file for approval of the plan.
The bigger stake in Unit 4, “does not solve our capacity shortage, but it will meet about 25% of the overall capacity needed today while Montana transitions to using more carbon-free energy,” said Rowe. The utility has committed to reducing its overall carbon intensity 90% by 2045 compared to 2010.