Puget Sound Energy’s (PSE) plan to sell part of its stake in a Montana coal plant is not in ratepayers’ best interest and should not be approved by Washington regulators, says a written filing by the staff of the state Public Utilities and Transportation Commission.

The staff recommendation was filed in advance of a Thursday public hearing about PSE’s proposed sale — first disclosed last December. The deal would turn over a 50% ownership stake in Unit 4 of the four-unit Colstrip power plant to two other companies — Talen Energy and NorthWestern Energy.

The staff found that PSE “has failed to demonstrate that the proposed transfers of
property are consistent with the public interest,” and the sale terms hold “significant potential to cause harm to ratepayers,” according to a summary of the staff findings by Chris McGuire, the assistant director of energy regulation for the regulatory commission.

The staff review cited concerns about the cost of PSE replacement power that would need to be purchased if the sale went through. The review also found fault with a second part of the purchase that would turn over an ownership interest in a powerline transmission system, which could one day help PSE bring wind power or other sources of Montana renewable energy to Washington consumers.

PSE, in a written statement, said the sale would benefit customers, and that “we will continue to work through the process with the Utilities and Transportation Commission.”

Three commissioners appointed by the governor will be reviewing the staff recommendations and other written comments and taking public testimony at the virtual hearing Thursday.

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The commissioners can vote to reject the sale, or approve it, possibly setting additional conditions.

Colstrip’s first two older, smaller units — 1 and 2 — owned by PSE and Talen Montana — shut down this year.

Under Washington state legislation passed in 2019. PSE must be off coal power by 2025. PSE has proposed to sell its stake in Unit 4 and then buy power from the unit until the mid-decade deadline, while continuing to hold a stake in Unit 3.

The staff found that it was “far from certain” that the Unit 4 sale would deliver benefits to ratepayers. The staff analysis alleged that the utility analysis that showed savings relied on an overstatement of the maintenance costs, and that buying the power could be prove costly if market prices rise.

Janet Kim, a PSE spokesperson, said the Colstrip Unit 4 sale would enable PSE to reach its clean energy goals “even before 2025, and take actionable measures on behalf of our customers.”

Colstrip has been a major source of family-wage jobs in southeast Montana, and has strong political support in the state, and in the community of Colstrip, which has long relied on the plant’s jobs. The proposed sale of Unit 4 also is being watchdogged by environmental groups concerned that NorthWestern Energy will attempt to keep Colstrip Unit 4 operating for many years into the future, and thus prolong the plant’s contributions to greenhouse gas emissions.

“Washington is a climate leader, and allowing the state’s largest utility to cut and run from its mistakes isn’t leadership … By selling the Colstrip plant to an out-of-state polluter rather than guiding it to an orderly retirement, Puget Sound Energy is enabling more climate disruption,” Doug Howell, senior campaign representative for the Sierra Club, said in an earlier interview.