Montana to close two coal units serving Pacific Northwest customers

The road to a coal-less future was strewn with two more casualties Tuesday, after a large Montana coal plant agreed to shut down two of its units.

Under court order, Puget Sound Energy (PSE) and Talen Energy (NYSE:TLN) will close two of the oldest units of the Colstrip Generating Station, which they co-own, by July 2022. The companies were taken to court by the Sierra Club and another environmental group, the Montana Environmental Information Center, on allegations that the plant violated the federal Clean Air Act.

The Colstrip station which has a total of four coal units, is one of the most polluting in the country, reports The Seattle Times, citing studies by environmental groups that used government data.

The newspaper notes the expected closure is actually good news for PSE because it means it will not have to pay for costly pollution control upgrades at the two units, which opened in the 1970s.

The Colstrip station supplies power to about 20 percent of the 1.1 million customers served by PSE in the Pacific Northwest.

No job losses are expected to result from closing the two units, since the other two units will be allowed to keep operating. The facility employs about 360 workers. The once-mighty U.S. coal industry is suffering, as a perfect storm of bad news – low prices, weak demand and tighter environmental controls – put a stranglehold on the sector.

Last month the U.S. Energy Information reported that coal production in the United States has dropped to levels not seen since 1981 – as utilities switch to cheaper natural gas and older coal-fired power plants are retired to conform with new emissions regulations.

In January the amount of coal used for electricity generation in the United States sunk to a 45-year low. A graph from the EIA shows coal power generation dipping below 100 million megawatt hours on a monthly basis, with the trend line dropping steadily since 2007. In comparison electricity from natural gas, a substitute fuel for utilities, increased during the same time period, as shale gas production in the U.S. ramped up, causing prices to fall.

Along with low coal prices, the Obama administration's focus on reducing emissions from coal-powered electricity plants has pushed a number of U.S. producers into bankruptcy protection, including Peabody Energy (NYSE:BTU), the world's largest privately owned coal producer. The ensuing layoffs have created a battleground in the upcoming presidential election, with the nominee for the Democrats, Hilary Clinton, and presumptive Republican nominee Donald Trump both promising help for displaced coal miners.