- Associated Press - Friday, April 1, 2016

SEATTLE (AP) - Washington state’s largest utility will be able to set aside money to pay for the future shutdown of two coal-powered electricity plants it co-owns in Montana under a bill Gov. Jay Inslee signed Friday.

However, before signing the bill, Inslee vetoed a section of the legislation that had said Puget Sound Energy, Colstrip’s largest owner, couldn’t use that money if it closed two aging units before Dec. 31, 2022.

As he prepared to sign the bill, Inslee said the measure “represents an important step towards ending Washington’s reliance on coal-fired electricity and transitioning to cleaner energy sources.”

Senate Bill 6248 lets Puget Sound Energy create a fund to cover future decommissioning and cleanup costs at the Colstrip plant in Montana. The Bellevue-based utility owns half of units 1 and 2, which were built in the mid-1970s.

“To be clear, no decision has been made on when the older Colstrip units might close,” Inslee said in a written statement issued after the signing. He noted that the Utilities and Transportation Commission must conduct proceedings before they can approve any closure decision. Those proceedings have been delayed until next year, Inslee said, and Montana is welcome to participate.

The future of the oldest units at Colstrip has been a heated debate in Montana and Washington, and it is looming large in the governor’s race in Montana.

Montana Gov. Steve Bullock last week asked Inslee to veto the bill over concerns about its effect on Montana. Republican candidate Greg Gianforte has used the issue to pounce on Bullock, a Democrat seeking a second term.

Montana lawmakers traveled to Olympia to testify against the bill this year, telling their Washington counterparts a partial shutdown would have dire economic consequences on the southeastern Montana community of Colstrip and on industrial users across the state that depend on cheap power.

In an emailed statement Friday, Bullock said he was disappointed with Inslee’s decision to sign the bill. “Now we need to redouble our efforts to fight for Montanans whose livelihoods depend on coal and develop responsible, Montana-made energy that will keep our economy competitive and create more good-paying jobs,” he wrote.

Colstrip, the second-largest coal-fired plant in the West, is under pressure from a weak coal market and increasing federal regulations.

The bill initially authorized Puget Sound Energy to file a plan to decommission units 1 and 2 and allowed the utility to buy additional ownership in one of the two newer units.

But the state Legislature ultimately passed a version dealing with setting up “a retirement account” to help pay for the future costs associated with closure. The bill does not require the units to be closed nor does it set a timeline for shutdown.

The bill’s prime sponsor, Sen. Doug Ericksen, R-Ferndale, criticized the partial veto Friday. He said the vetoed section would have minimized impacts to workers and utility consumers by ensuring that a closure would not happen until after 2022.

Environmental groups applauded the measure as a crucial step toward moving away from coal-fired electricity.

“It provides an important tool for PSE to manage risks for the community and costs for consumers that will result in more timely closure and ensure responsible cleanup,” said the Sierra Club’s Bill Arthur.

Washington state currently gets only about 15 percent of its electricity from coal, but Inslee and others have pushed utilities in the state to phase out the coal-fired power they get from out of state.

Separately, Puget Sound Energy must tell Washington state utilities regulators in early January its plan for the Colstrip units, including “a narrow window of dates for the planned retirement of Units 1 and 2” as well as how much it costs.

“The data will speak for what the best next step is for Colstrip 1 and 2,” said Grant Ringel, a company spokesman.

Puget Sound Energy has previously said shutting down the plants and cleaning them up would cost between $130 million and $200 million.

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AP reporters Rachel La Corte in Olympia, Washington, and Bobby Caina Calvan in Helena, Montana, contributed to this report.

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