Editor’s note: This story has been updated.
A Hardin coal-fired power plant with 30 employees and an annual payroll of $3 million could be shut down as early as the first quarter of 2018, according to the company that owns it.
In an Oct. 5 letter to the Montana Public Service Commission, Gary Arneson, vice president of operations for Rocky Mountain Power, said the company “has decided to exit the Hardin Generating Station.”
The 120-megawatt plant was built in 2006, and while its cost of production “is among the lowest for thermal generators in thew region,” Arneson said in the letter, “the decline in the market price of electricity has caused Hardin to lose money since 2014. … Unfortunately, these losses are no longer sustainable.”
In addition to the direct impact on company employees, Arneson said, a closure would also endanger jobs at the Crow Tribe-owned Absaloka Coal Mine, which supplies coal to the Hardin plant.
The only other option besides closure is selling the plant, Arneson said, adding that Rocky Mountain Power has “initiated preliminary discussions with potential interested parties. We believe Hardin would be a valuable asset for an electric distribution company or an industrial concern or consortium with a substantial electric load.”
Arneson could not be reached for comment, but Anne Hedges, deputy director of the Montana Environmental Information Center, said it appears Rocky Mountain is making a pitch to be purchased by NorthWestern Energy, which is the transmission service provider for the Hardin plant.
On Wednesday, the Taylor Luther Group, a Helena law firm that represents Rocky Mountain Power, wrote to the PSC asking that Arneson’s Oct. 5 letter be included as public comment for consideration under NorthWestern’s Energy Supply Procurement Plan, which is currently under review by the PSC.
Pam Bucy, a lawyer with the Taylor Luther Group, said later Friday that Rocky Mountain Power has been talking to NorthWestern Energy but is also “talking to and open to other potential buyers.”
Hedges said Rocky Mountain Power is “just not viable, so they need someone to take over who has a guaranteed customer base.” If that’s what Rocky Mountain Power is up to, Hedges said, it’s a desperate, probably doomed maneuver.
“I can’t imagine that NorthWestern would want to take a plant like this into their portfolio,” she said. “They’d be crazy to do that.”
Bucy said the ideal buyer would be a company that can consume the power in Montana, so that it doesn’t have to be sold on the open market in competition with “highly subsidized wind” and solar power.
Bucy also said the plant could be attractive to a buyer because of how efficient and reliable the plant is, and because it has modern pollution-control equipment.
“There are a lot of reasons that this would be a nice fit for NorthWestern or any consumer of power,” she said.
No one on the Public Service Commission could be reached for comment on Friday.
However, the letter continues, “if we are unable to identify a buyer for the facility, plant closure would be likely, perhaps as soon as the first or second quarter of 2018. We would of course notify State, Crow Nation, County and Town officials well in advance of a potential plant closure and would work with all parties to ensure an orderly transition to mitigate the economic and employment effects of shuttering such an important asset to the local and state economy.”
The letter said the plant employs 30 people with an average salary of $64,000, adding that a shutdown would also eliminate $440,000 in annual property tax payments to local governments and would end royalties paid to the Crow Nation from the 550,000 tons of coal mined each year.
The plant has been struggling for years. The Billings Gazette reported in July that Colorado Energy Management, Rocky Mountain’s parent company, owed Big Horn County more than $2.1 million in delinquent taxes for 2014 and 2016. In September 2016, the Gazette reported, Colorado Energy did pay the county $798,679 to cover its 2015 taxes.
Bucy said Rocky Mountain is now owned by Beowulf Energy, headquartered in Maryland. She said she didn’t know if Colorado Energy ever tried to find a buyer for the Hardin plant, but that this is the first time Beowulf has done so.
Bucy also said that there have been no layoffs, and that the $3 million payroll has been maintained regardless of production levels. Based on information Rocky Mountain Power provided to the state Department of Environmental Quality, Hedges said, the plant operated only 143 days in 2016 and 228 days in 2015. As of this September, she said, the plant has operated only 12 days in 2017.
The plant is located on 200 acres of land owned by Rocky Mountain Power. Arneson’s letter said a 15-megawatt solar facility was proposed at Hardin in 2012 and included preliminary design work and an environmental assessment. Also, he said, the plant is three miles from a natural-gas pipeline and could be converted to natural gas as its primary fuel.