Power companies in the Pacific Northwest are furious that customers could be forced to pay for the costs of coal-fired power plants that aren’t producing power.
This nasty dispute stems from the Trump administration’s continued efforts to preserve the U.S. coal industry.
The owner of a coal-fired power plant near Centralia, Washington, which appears to have burned the last of its coal in December, said it was following federal orders to keep the facility open. now, Transalta Co., Ltd. is seeking tens of millions of dollars in reimbursement for its employees and costs incurred in keeping the 55-year-old power plant open.
The company’s CEO said TransAlta also remains committed to plans to retrofit the large plant to burn natural gas in the future.
In December, TransAlta’s long-standing plan to retire the Northwest’s only remaining coal-fired power plant was blocked by Energy Secretary Chris Wright’s 90-day emergency order, which deemed the plant essential to the region’s energy security. Since then, Wright has renewed the order twice, most recently in mid-June.
The Federal Energy Regulatory Commission is currently reviewing TransAlta’s policies. Refund request against opposite briefs It was filed by a number of Western utility associations and regional grid managers. Environmental groups and the Washington state attorney general have also joined the fray.
“If these coal-fired power plants are so essential to keeping the lights on, why are they sitting idle while families and businesses pay so much to keep them running?” Ted Kelly of the Environmental Defense Fund said in a press release. “These coal obligations are increasingly being exposed for what they are: a futile charade to hold families and businesses accountable.”
The first cost recovery bill TransAlta submitted for federal review on April 30 was for nearly $20 million. At the time, the company warned that it was incurring ongoing costs to keep the Centralia power plant open and would later seek additional reimbursement.
Additionally, TransAlta estimates that if it is ordered to wait until the third and fourth quarters of 2026, it will need $23 million in repairs and upgrades to keep its aging coal-fired power plants in safe operating condition. Coincidentally, the latest extension of the Department of Energy’s emergency order is through September 13th.
Washington state and related environmental groups argue there is no emergency and are challenging the Energy Department’s order as illegal. The Department of Energy counters that without coal power, the Northwest would be needlessly at risk of power outages.
“During peak summer demand, people in the North West deserve continued access to affordable, reliable and safe energy to power and cool their homes.” Secretary of Energy Wright said: In a statement in mid-June.
Who should pay?
TransAlta is an independent power company, but it has no customers in the Northwest.
The Alberta-based company proposed that the first 90 days of orders be split between two entities initially authorized to dispatch the plant’s potential coal-fired power generation. They are the Portland-based Bonneville Power Administration and CAISO, which manages California’s wholesale power grid.
The second and third emergency orders named two new companies that TransAlta is proposing to put at risk. They are the Southwest Power Pool, headquartered in Arkansas, and GridForce, a small company that operates a data platform that helps balance supply and demand on the Northwest power grid.
All four companies rejected TransAlta’s billing proposal. They argued it was “unfair and unreasonable” to be charged for coal-fired power they neither requested nor received.
“Based on the facts and plain meaning of the DOE’s order, nothing makes Bonneville a customer of TransAlta or otherwise makes Bonneville liable for costs associated with the availability or shipment of the[Centralia power plant],” BPA attorney Matthew Perkins said in a written opposition filed with the regulatory commission.
The Bonneville Power Administration has not specifically said whether it will pass on TransAlta’s costs to its own customers. BPA provides wholesale electricity to more than 130 electric utilities throughout Oregon, Washington, Idaho, and western Montana.
Customer power companies are on alert.
“It is completely inappropriate to allow Bonneville to recover even a penny of its costs,” lawyers representing local electric cooperatives, the Portland-based Public Power Council, and the Snohomish County Public Utility District wrote in a complaint filed with FERC on Monday.
GridForce said it could be forced out of business if it clings to a share of TransAlta’s tab. The Texas-based data provider asked to be removed from FERC’s responsibility, saying it had no say in decisions about Centralia’s operations.
The Federal Energy Regulatory Commission will likely appoint an administrative law judge to review TransAlta’s cost recovery case and send a recommended ruling to a five-member panel for a final decision. The five commissioners are political appointees, three Republicans and two Democrats. A FERC spokesperson this week declined to provide any guidance on the timeline for a ruling in the case.
TransAlta walks a fine line
Through all of this, TransAlta has taken pains to avoid criticizing or antagonizing the Trump administration. In an earnings call with Canadian equity analysts last month, Chief Executive Officer Joel Hunter reiterated that the company was following the Department of Energy’s orders to keep the Centralia coal-fired power plant open.
But Hunter also said he doesn’t expect Centralia to resume using coal because the price is so uncompetitive.
“It hasn’t been done so far, but our expectation is that it probably won’t be done here throughout the (period of) the order,” Hunter said.
The company’s cost recovery application filed with FERC details how the economics of coal-fired power generation are deteriorating in Washington state.
The Democratic-controlled state Legislature voted to apply the state’s hefty sales tax to coal deliveries starting this spring. The same law also provides: If TransAlta resumes burning coal, it would have to buy climate pollution allowances at the state’s regular cap-and-trade auctions. Given that coal’s carbon footprint is much greater than that of stone alternatives, the cost of these emissions fees would be prohibitive.
Under clean energy transition requirements that took effect in January, electricity produced from coal in Centralia must be sold outside the state because Washington utilities cannot purchase electricity from coal.
Hunter said TransAlta wants to move forward with previously announced plans to convert the giant 730-megawatt Centralia coal-fired power plant to run on natural gas within the next few years.
“Transformation progress continues and we are pleased to report that we are on track to make a final investment decision in the first quarter of 2027.“Mr. Hunter told Canadian equity analysts.”We are currently doing front-end engineering and design work at our facility. ”
In a separate federal lawsuit, the Washington state attorney general and environmental groups are asking a judge to invalidate the Department of Energy’s emergency order to keep the Centralia coal-fired power plant open. The case is pending before the 9th U.S. Circuit Court of Appeals.
TransAlta’s Centralia operation is one of at least six coal-fired power plants across the country that the Trump administration is trying to keep open past their planned retirement dates.
