Puget Sound Energy is asking state regulators to reconsider certain conditions utility officials said were “unreasonable” in its long-term power purchase agreement with TransAlta, which sets the stage for closing the state’s remaining coal-fired electric generating plants by 2025.
PSE filed a petition Wednesday with the Washington Utilities and Transportation Commission, which approved the 11-year agreement on Jan. 9, allowing PSE to purchase an average of 346 megawatts of coal transition power from the Centralia plant. That’s enough to power about 346,000 typical American homes.
The agreement ensures a customer for much of the electricity produced at the Centralia facility until the coal-powered turbines are shut down in 2020 and 2025, which is good news for the Canadian power company, officials said after signing the proposed agreement in July.
Now, PSE is asking for an amendment to address the state’s concerns that TransAlta could potentially lay off employees or shut down operations prior to 2020 or 2025 and buy power on the market to sell under the agreement.
“So it provides an off-ramp for PSE to terminate the contract if TransAlta were to reduce employment or shut down completely,” said Roger Thompson, a spokesman for PSE.
Additionally, Thompson said, PSE is asking for the state to change conditions of the agreement that create uncertain financial risks for state’s oldest utility. The commission could potentially re-review the contract and decide it was no longer cost-effective for customers, leaving PSE locked into an agreement with no way to recover expenses in rates.
“It creates, potentially, a tremendous liability,” Thompson said.
TransAlta officials said they are closely monitoring the progress of the agreement and will cooperate to find an acceptable solution.
“We’re really on the sideline for this portion,” said Stacey Hatcher, a spokeswoman for TransAlta. “But we’re watching with great interest.”
Representatives with the Sierra Club’s Beyond Coal Campaign are also monitoring the coal transition contract, which would take effect Dec. 1, 2014, and continue through Dec. 31, 2025.
Krista Collard, the spokeswoman for the campaign in the Pacific Northwest, said earlier this month the group supports the agreement to move the state away from “dirty coal” and particularly appreciates the $55 million TransAlta will pay toward clean energy and investments to help Centralia and the surrounding communities recover from the plant’s closure.
The Centralia facility, which laid off 600 when it shut down its coal mine in 2006, is still determining how it will transition away from producing coal-generated energy by 2025, according to company officials.
In the meantime, about 267 employees remain at the plant, in addition to 13 at the mine.
PSE, which provides electricity in Thurston County and much of the rest of the Puget Sound region, pools different energy sources to determine costs and expects to need additional power supplies for its 1.1 million electric customers beyond what the contract provides.
Thompson said the TransAlta deal will provide a significant amount of the energy needed, but the utility will continually evaluate other bids to address future demand.
The commission will take action on the agreement or decide which steps to follow by Feb. 11.
Amy Nile: (360) 807-8235