TransAlta Centralia will, for the time being, not be allowed to recover the costs for repairing and maintaining a coal generation unit after a Trump administration order last year required the company to keep it operational.
The Canada-based company is looking for someone else to foot the bill.
In an order issued on Thursday of last week, the Federal Energy Regulatory Commission (FERC) denied the local power plant operator’s request to collect lump sum payments totaling around $20 million from large scale energy companies and utilities that would have benefited from the operation of the unit had it been needed.
Despite the emergency order to keep the unit in place, it did not generate any power after the long-planned decommissioning date at the end of last year.
The ruling recognized the request to recuperate costs was justified, but denied it on the grounds that it proposed to recuperate costs from too wide a geographic area. The companies and utilities that would have been saddled with the cost serve areas in the southwest region of the country that were not mentioned in the emergency order requiring the generator to stay operational.
“While we affirm that TransAlta is entitled to recover the costs it incurred to keep Centralia operational in compliance with DOE’s directives in the Emergency Orders,” reads the order, “we find that TransAlta’s cost allocation proposal is not just and reasonable because it fails to allocate such costs based on the geographic scope of the emergency described in the Emergency Orders.”
The proposal would have sought to recuperate the bulk of the power from the Bonneville Power Administration and California Independent System Operator Corporation (CAISO) as well as a smaller portion of the costs from Gridforce Energy Management and the Southwest Power Pool (SSP).
The original emergency order to keep the unit operational cited an opinion from the North American Electric Reliability Corporation that predicted that the Pacific Northwest could see power shortages as the region shuts down fossil fuel plants that once generated a large portion of the region's power.
According to FERC, the scope of that justification should limit the geographic impact of cost recovery.
In TransAlta’s original request for cost recovery, it included the southern groups such as CAISO and the Southwest Power Pool because those groups were among the utilities that could request the plant begin producing power if existing supply was insufficient.
“TransAlta explains that, in the Initial Emergency Order, DOE directed TransAlta to make Centralia available to operate at the direction of either Bonneville or CAISO and that in the Amended Emergency Order, DOE directed TransAlta to make Centralia available to operate at the direction of either Gridforce or SPP,” reads the recent FERC order.
While FERC did decline the proposal for cost recovery, it did so “without prejudice,” leaving the door open for TransAlta to submit a new proposal that it believes may be approved by FERC.
All of the utility groups and power administrations mentioned in the original order to keep the plant operational filed petitions against TransAlta’s request to recuperate costs, making a number of different cases against cost recovery.
The southern groups, CAISO and SSP, made the geographic case, which was cited by FERC, while others made other cases, pointing out that TransAlta had not provided proof of the costs it claimed were necessary to keep the unit running. The groups also claimed they should not be liable for the costs because they did not use any power from the plant.
A long list of other groups also petitioned the request, including public utilities such as Snohomish County Public Utility District and environmental groups such as the Sierra Club
In a news release from the Sierra Club released shortly after the decision to deny the cost recovery request, the group celebrated the order. The group describes the recent order as “an important step toward protecting Northwest ratepayers from the Trump administration’s costly and unlawful effort to prop up the retired coal plant.”
In the recent order, TransAlta warned that it will continue to seek cost recovery, especially if additional federal orders require the company to keep the unit operational. In the recent order, FERC cites an estimate from TransAlta predicting that keeping the unit operational through the end of 2026 will cost around $23 million for repairs and refurbishment.
TransAlta Centralia has announced plans to explore converting the local facility to process natural gas rather than coal.
For previous reporting on the issue from The Washington State Standard, visit https://tinyurl.com/3nf8ry8x.
