As US Coal Plants Shutter, One Town Tests an Off-Ramp

Local officials say they are excited about new wind and solar projects backed by TransAlta and others, which have sprung up independently of the agreement, but those will create a fraction of the jobs and tax base that the coal plant has historically provided. And attempts to bring new businesses to the area have so far been disappointing.

“[Economic development] has not worked that well,” said Nancy Hirsh, who helped broker the 2011 deal as policy director of the NW Energy Coalition, which advocates for clean energy in the region, and serves on the board that’s disbursing the TransAlta money. “As far as a new economic engine in that county, that part has been challenging.”

States Push for a Just Transition

Democrats — whether they’re presidential candidates championing a “Green New Deal” or state lawmakers — have tried to advance policies that phase out coal while helping laid-off workers.

Colorado legislators last year set statewide goals for greenhouse gas reduction and built a roadmap to help utilities such as Xcel Energy, the state’s largest, shift to carbon-free energy. At the same time, they created a new “Just Transition” office tasked with supporting coal-dependent communities as power plants close. 

Members of the office’s advisory committee are expected this summer to send state regulators a plan to help such places.

“It might be that there’s a role for the utilities, or a role for other new providers,” said Colorado House Speaker KC Becker, a Democrat and sponsor of both bills. “It might be that there’s state money. But I think that really what’s important is that local communities be involved.”

In West Virginia, a Democratic state delegate has introduced a bipartisan bill to create a similar office there.

No Republicans voted for Colorado’s transition office bill, however, and Becker said communities facing coal-plant closures didn’t support it.

But the law doesn’t set aside money to help workers or communities, and the office will be run out of Denver – far from rural areas hit hardest by the closures. 

“I think, you see, it doesn’t give communities a great deal of comfort,” said Bonnie Petersen, director of Associated Governments of Northwest Colorado, a council of local governments.

State Rep. Perry Will, a Republican who voted against the bill, said the advisory committee could get something done, given time. But, he added, coal-mining and power-plant jobs may not be replaceable, and he questioned policies that take such jobs away.

Will’s rural Colorado district includes one of the state’s largest coal plants, Craig Station, which co-operative power supplier Tri-State Generation and Transmission Association plans to shut down by 2030.

“I just feel like there’s a war on rural Colorado. And I don’t care if it’s coal or wanting to shut down private prisons,” Will said. “Because not every rural community has a ski area, right?”

In New Mexico, a Democratic-backed clean energy law enacted last year will allow utilities to refinance debt payments and raise rates for consumers as they decommission power plants, while also requiring them to spend money on severance, job training and economic development.

The state’s largest electricity provider, the Public Service Company of New Mexico, or PNM, has under the law committed to spending $40 million on severance payments, job training and economic development aid as it prepares to shut down the San Juan Generating Station in 2022. It also will install solar and natural gas power near the plant.

The power plant and the mine that supplies it employ about 445 people overall, according to the company. About 60 workers would be employed beyond 2022 to reclaim the mine site.

As in Colorado, some Republicans are skeptical that the state assistance will achieve much.

“The job-training part, I think, is still a joke,” said New Mexico state Sen. William Sharer, a Republican who represents San Juan County. Mid-career professionals earning far above the metro area average at the power plant are unlikely to want to take a pay cut and become apprentices, he said.

San Juan County leaders say they’re hoping to grow other industries, such as outdoor recreation. The county, which includes the 45,000-person city of Farmington, is less dependent on coal and tax revenue than more rural areas.

But they, like Sharer, also hope the coal plant can be saved. One company, Enchant Energy, wants to retrofit the facility with technology that would virtually eliminate carbon emissions by capturing carbon dioxide and pumping it to oilfields in New Mexico and Texas, where the gas can be used in drilling. 

“That’s going to be the real savior of San Juan County, is the carbon capture and sequestration,” Sharer said. That technology, though, is still in its infancy and not commonly used.

State lawmakers also have passed laws to help communities shore up their tax base as the coal industry shrinks. The New Mexico legislature, for instance, recently passed a bill that would give new taxing authorities to the community around a retiring power plant. 

A Best-Case Scenario

The Centralia agreement is an example of an unusually well-funded, long-planned transition. Unlike many coal plant closures today, it was forged not because the company was going out of business but as a political deal to address climate change.

“It was unprecedented,” said Bruce Nilles, who was part of the 2011 negotiations as the founder of the Sierra Club’s Beyond Coal campaign. (He now works for the Rocky Mountain Institute, a Colorado-based sustainability nonprofit.) “It is still an anomaly largely across the country.”

But although the plant closure is something of a best-case scenario for the community, local leaders still say the transition will hurt.

The area’s coal industry has been in decline for years. Six hundred people were laid off when the local coal mine shuttered in 2006. The power plant’s workforce has dropped from 270 to 188 people since 2011, and its property tax contributions have fallen from $7 million to an estimated $3 million over that period.

TransAlta still has an outsize imprint on the area’s economy. As recently as 2011, then-Mayor Harlan Thompson called it “our Boeing and Microsoft put together.”

State lawmakers initially wanted to shutter the plant in 2015, a proposal that was met with fierce opposition from TransAlta and community leaders. Then-Washington state Gov. Christine Gregoire, a Democrat, wanted to end the plant’s emissions, but she worried about Centralia, which at the time was reeling from the closure of the mine and a pair of devastating floods.

“The worst thing you can do is to precipitously just close down a plant,” Gregoire said in an interview. “That is not an outcome that's good for anybody. It may stop the emissions, but we need to be mindful of the human cost as well.”

And she feared at the time that trying to close the plant abruptly may have ended up in litigation, dragging out the timeline anyway and dividing the community. Gregoire brought state officials and environmentalists to the table with TransAlta and told negotiators to bring her a deal that worked for the community. 

After days of closed-door negotiations, the parties emerged with a plan. TransAlta would be given until 2025. In exchange, the company agreed to invest $25 million into energy technology projects, $20 million into economic and community development, with another $10 million for weatherization work to improve energy efficiency.

The community development money includes $8 million for payouts to displaced workers, and another $1 million set aside to pay for education and retraining opportunities.

The deal, which replaced the contentious shutdown plan, has since been praised by pretty much everyone involved — and helped forge a political consensus that Centralia needed to move on from coal. 

Unlike the sudden mine closure, Centralia has had money and time to prepare. The transition plan allowed 40% of TransAlta’s workers to reach retirement age before the closure.

Many of the remaining workers have had time to find new jobs elsewhere, while those who remain can seek retraining and education opportunities through the $1 million fund. And those who stay through the closure will be given payouts of about $38,000 when their positions end. 

About $21 million of the transition money has been awarded so far, with the remainder to be disbursed until the closure of the second burner in 2025. The company has spent more than $1 million in small solar projects at local colleges, schools, city government buildings and hospitals. It has put another $3 million into vocational training at the local high school and community college. 

“It’s the best we could have gotten,” said Lewis County Commissioner Edna Fund, who was a Centralia city councilor at the time of the 2011 deal. “The writing was on the wall. We know the dates, we know what we have to do, and we have people working very hard to make sure that this transition occurs well.”

But no one is claiming that the transition agreement will make up for the loss of the plant. Gregoire, who has not closely followed the Centralia transition since her tenure as governor ended in 2013, said that even the deal’s backers knew the process would be “painful” even if everything went as planned. 

“It's still hard,” said Lori Schmitt, a TransAlta spokeswoman. “The community impacts, we won't be able with $55 million to replace everything with that money. The employees, there's going to be people that will be looking for jobs.”

TransAlta did not make employees available to comment, and representatives for IBEW Local 125, which represents workers at the plant, did not respond to interview requests.

Bob Guenther, who worked at the plant for 34 years and is a leading labor organizer in the region, was among the locals who helped broker the deal for Centralia. 

“If they would have just automatically shut that plant down without a lot of planning, it would have really hurt this community a lot worse,” he said. “It's not going to be pretty. There's a lot of people out there that are pissed because the plant's going to shut down. I'm not happy either, but it's going to shut down; you've got to face reality.”