The TransAlta plant looms in the background as a worker walks through the grass in this 2016 Chronicle file photo.
TransAlta will continue its plans to potentially convert to natural gas on schedule and later transition into renewable energy despite a veto from Gov. Jay Inslee on tax incentives that would have helped the business stay more competitive.
Bob Nelson, managing director at Centralia and the company’s U.S. president, said he is disappointed to not receive the one-time tax advantage, but said the plant will still begin the conversion to gas in 2021.
“We don’t get the tax break, which makes us less competitive and hinders us a bit, but we’ll keep pushing forward,” he said. “It doesn’t change our strategy.”
The conversion of the coal-fired plant to natural gas or biomass fuel will cost around $84 million. Now, with the veto, the company will have to pay sales tax on the conversion, but Nelson ensured it wasn’t a “show stopper.”
TransAlta currently has around 200 employees at its Centralia plant, and once the first coal-fired unit is powered down in 2020, TransAlta officials said there would be around 110 jobs remaining. If the conversion is successful, and there is one gas unit and one coal unit, the job number would increase to 150.
The conversion of the second coal-fired unit depends on the market, Nelson said. Although that’s the plan for now, Nelson said he knows there will be a lot of opposition.
The ultimate goal is for the company to transition into renewable energy, which would include wind or solar energy. That wouldn’t happen for 15 to 20 years after the conversion of the first unit.
“We have to be able to get return on our investment,” Nelson said of the 15- to 20-year timeline. “We believe it will be that long for the state to get to a total renewables state.”
The point of the transition is to get the lowest cost of reliable power to consumers, Nelson said.
He said the conversion would lower emissions.
“By doing that, we stay within that profile, we lower emissions, maintain jobs and a taxbase,” Nelson said. “Our commitment is to transition to renewable at some point. We want to stay very active and keep our footprint in Washington.”
Senate Bill 5439, sponsored by Sen. John Braun, R-Centralia, and a companion bill in the House, would have provided tax incentives for the conversion, but was ultimately vetoed by Inslee on Friday, July 7.
Sen. Doug Ericksen, R-Ferndale, said in a statement, “I am confident we will be able to override these vetoes because of the overwhelming support this bill received in the House and Senate.”
When asked if he believes the veto could be overturned, Nelson said he is unsure.
“Whatever happens, happens,” he said. “I hope it does but if it doesn’t we’re going forward with our strategy.”
According to a 2017 report by The Northwest Power and Conservation Council, the Pacific Northwest’s power supply is expected to be adequate through 2020. New capacity will need to be added by 2021 to maintain an adequate supply, according to TransAlta.
“As a company, TransAlta is accelerating the transition to cleaner power while ramping up renewables,” according to a statement from TransAlta. “We believe converting the Centralia facility provides an effective transition to renewables, is important to the local communities for jobs and tax base, and supports the state in its long-term emissions strategy.”
In 2011, then-Gov. Christine Gregoire signed an agreement with Canadian-based TransAlta to shut down the first coal-fired boiler by 2020 and the other by 2025.
