Q1) Is there a settlement in the works related to Colstrip?
A1) A partial settlement was filed on September 15 that includes PSE, the staff of the Washington Utilities and Transportation Commission (WUTC), the Montana Attorney General’s office, and seven other entities. The WUTC approved the settlement on December 5, 2017.
As it relates to Colstrip, the conversation includes the following:
Q2) Will the settlement impact the retirement date of Units 1 & 2, which are scheduled to retire by July 2022?
A2) No. Colstrip Units 1 & 2, owned by PSE and Talen each with a 50% share, will be retired by July 1, 2022. The General Rate Case settlement does not change the retirement date of those units.
Q3) What does it mean to update a depreciation schedule? How does this impact Units 3 & 4?
A3) The schedule will be updated by the process of determining the depreciation life of Units 1 & 2, including a date by which those units will be considered “depreciated,” meaning PSE has recovered the cost of investments, plus a rate of return. This will help make sure those who have been served by the Colstrip facilities are the ones who pay for them, not future generations. PSE will work to recover as much of the investment costs for Units 1 & 2 as possible through normal customer rates.
The settlement will also include the depreciation schedule for Units 3 & 4 so that PSE can fully depreciate the asset by 2027, the date prescribed in the settlement. This depreciation date does not represent a retirement date for Units 3 & 4.
Q4) Do the new depreciation schedules under discussion mean that you have a retirement date set for Units 3 & 4?
A4) No. The settlement process only addresses the depreciation schedule for Units 3 & 4, setting the timeframe by which PSE will recover its outstanding investments in Colstrip. The settlement does not layout a retirement date. PSE is only a 25% owner in Units 3 & 4 and all six owners would have to make that determination.
Q5) When you recover the remaining investments through rates to depreciate the units, do you want to recover your investment plus some rate of return?
A5) Yes. This is consistent with depreciation for other utility assets.
Q6) There have been various news articles published claiming that PSE wants to move away from coal-fired power generation, and that its customers don’t want coal-fired generation in PSE’s portfolio. What is PSE’s perspective on coal-fired power?
A6) PSE has an obligation to provide the lowest cost power to our customers, so decisions regarding Colstrip are guided by the economics of the plant. None of the Colstrip plant owners seem to be moving towards increasing coal-fired generation at this point. As long as the units are operating safely and economically, Colstrip represents the least cost option at this time to provide power to our customers.
That said, PSE’s customers have high expectations that we provide them cleaner energy. We have been aggressively investing in wind generation and energy efficiency for years to meet this expectation. In fact, PSE is the largest owner of wind generation in Washington state and one of the largest in the U.S.
Q7) What is Colstrip’s overall share of PSE’s portfolio?
A7) Colstrip makes up approximately 20% of PSE’s portfolio.
Q8) Who are the intervened in PSE’s Rate Case?
A8) There were about a dozen intervenors in the PSE Rate Case comprised of groups representing various interests. Intervenors included:
Environmental community advocates such as, the Sierra Club, Northwest Energy Coalition and the Natural Resources Defense Council
Low income advocates from the Office of the Washington Attorney General, Public Counsel Unit
Q9) How does PSE plan to handle decommissioning and remediation?
A9) PSE is planning for the future to address and fund its share of any necessary decommissioning and cleanup of Units 1 & 2 when they are retired by 2022. This process began with the passage of legislation proposed by PSE to adequately fund the effort, and funds will be set aside for use in Colstrip. PSE has asked the WUTC to set aside between $300 and $400 million of federal grants and tax credits that the company has received to help pay for decommissioning and remediation (D&R).
Q10) Will there be money set aside to pay for impacts to Colstrip workers, school districts, county workers and other ‘local’ impacts beyond what is planned for decommissioning and remediation?
A10) A $10 million fund from PSE to help the community of Colstrip transition is also part of the settlement. While the details of how the transition fund will be spent have not been finalized, it is envisioned that economic development and job training for existing community members would be key components.
Q11) Is it fair to say that the cost of decommissioning and remediation is not being determined by the settlement? How will those issues be decided?
A11) PSE had expert consultants provide their best estimates on what the decommissioning and remediation (D & R) costs would be. PSE has identified for Units 1 & 2 that costs will be approximately $107 million and has asked that that amount be set aside to fund D & R efforts in the future. Again, this is the estimate provided by third party experts, and does not represent the final cost. PSE anticipates working with the other relevant Colstrip owners and the State of Montana to determine appropriate decommissioning and remediation measures.