Media Contact: (360) 664-1116 or media@utc.wa.gov
Docket number: UE-190882
Regulators deny $15.4 million from rate recovery related to 2018 Colstrip outage
Result of investigation into outage and replacement power costs
OLYMPIA, Wash. – Customers of investor-owned utilities in Washington will not be on the hook for some $15.4 million in replacement power costs following the 2018 outage of Units 3 and 4 of the Colstrip coal-fired power plant in Montana.
However, the order issued by the Washington Utilities and Transportation Commission does allow the three companies -- Avista Corporation, d/b/a Avista Utilities (Avista), Pacific Power & Light Company (Pacific Power), and Puget Sound Energy (PSE) -- to recover approximately $1.7 million in post-outage maintenance costs.
In a 2-1 decision, Chair David Danner and Commissioner Ann Rendahl found that due to a lack of documentation of decision making prior to and leading up to the shutdown of the units, Avista, Pacific Power, and PSE failed to prove that the companies’ costs for obtaining replacement power during the 2018 Colstrip outage were prudent.
When the commission considers the prudence of a company’s expenses, and whether a company may recover those costs from customers, a company must provide sufficient contemporaneous documentation so the commission is able to follow a company’s decision-making process, including the various options that were available to it and the reasons for its choices. Without contemporaneous documentation, any testimony or evidence provided after the decision would be constructed after the fact and based on hindsight, rather than the information the company knew at the time of the decision. Here, the commission majority found the companies failed to meet that burden of proof.
Commissioner Balasbas dissented, stating, “While my colleagues conclude the only way to determine prudence of operational decision making is with contemporaneous documentation, I believe a reasonable evaluation should also include elements of common sense, the necessary reliance on the expertise of employed or contracted utility personnel, and the testimony of credible witnesses.”
BACKGROUND
In February 2018, the Colstrip plant passed its required emissions testing by meeting the standard exactly, where in the past, the plant had passed the test with results under the standard. At its next required test in June 2018, Colstrip Units 3 and 4 were placed out-of-service due to failing required emissions testing and were not placed back in-service until September 2018. Avista, Pacific Power, and PSE each incurred costs to obtain replacement power for the duration of the outage.
In October 2019, the commission ordered an investigation to consider the prudency of decisions made by Avista, Pacific Power, and PSE leading up to the 2018 Colstrip outage and the costs incurred by each company to acquire replacement power.
Colstrip is a four unit coal-fired power plant located in Colstrip, Montana. Avista, Pacific Power, and PSE are co-owners of Colstrip. Talen Montana, LLC, the fourth co-owner and operator of Colstrip, is not a party to this proceeding.
Spokane-based Avista serves more than 250,000 electric customers and nearly 164,000 natural gas customers in Eastern Washington.
Pacific Power is a division of Portland, Ore.-based PacifiCorp which is owned by Berkshire Hathaway Energy of Des Moines, Iowa. The company provides electric service to about 130,000 customers in six Eastern Washington counties: Kittitas, Columbia, Garfield, Benton, Walla Walla, and Yakima. Cities in the company’s service territory include College Place, Dayton, Grandview, Naches, Pomeroy, Prescott, Selah, Sunnyside, Toppenish, Union Gap, Waitsburg, Walla Walla, Wapato, Yakima, and Zillah.
Bellevue-based PSE provides electricity service to more than 1.1 million electric customers in eight Washington counties: Island, King, Kitsap, Kittitas, Pierce, Skagit, Thurston, and Whatcom.
The UTC is the state agency that regulates private, investor-owned electric and natural gas utilities in Washington. It is the commission’s responsibility to ensure regulated companies provide safe and reliable service to customers at reasonable rates, while allowing them the opportunity to earn a fair profit.
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