HELENA, Mont. (AP) — The Montana Board of Investments has never made a loan like the $10 million a year House Speaker Austin Knudsen is proposing to help pay for the operations of an owner of the Colstrip power plant, the board’s executive director said Monday.
Talen Energy is hemorrhaging money as the operator and co-owner of two of the coal-fired plant’s four generating units. Those two older units must close by July 2022 under a legal settlement with two environmental organizations, but the closure could come as early as this year if Talen’s financial situation doesn’t turn around, a company lobbyist told a legislative panel.
“My client, Talen Montana, is losing about $30 million a year — that’s an average,” lobbyist Jon Metropoulos said. “We’re trying to find every possible tool to change the economics and continue to operate for five years.”
That has prompted state lawmakers to come up with a package of bills meant to stave off economic disaster for the town of Colstrip and soften the blow to the state’s treasury that the loss of Colstrip would cause. The package includes Knudsen’s proposal to provide $10 million annual low-interest loans from the state’s $1 billion coal tax trust fund.
The loans would be used to prop up Colstrip operations until the 2022 scheduled closure, which would give the state, the community and employees at the plant and the mine that provides it with coal time to prepare. The partial closure of Colstrip would not affect the plant’s two newer units, which are co-owned by six companies, including Talen.
Knudsen’s bill says the state Board of Investments may make such a loan if it will “prevent the elimination of jobs and provide stability in a community impacted by the operation of a coal-fired generating unit.”
However, the board has never made a loan to fund a company’s operations before, Executive Director David Ewer said. The board could do so, even to a company that is losing $30 million a year, if the loan meets the board’s standards and is secured with some asset, such as property, he said.
“The board has not made working capital loans in the past, but it’s still possible that we can examine a request and determine whether a loan is sufficiently credible,” Ewer said. “I would fully anticipate that this loan would have to be secured in some manner.”
Legislative pressure to prevent or delay the loss of jobs won’t prevent the board from making a sound financial decision on whether to loan the money to Talen, Ewer said.
“The board still has a fiduciary obligation,” he said. “Is it a loan that we anticipate can be fully repaid under the terms and conditions that the board sets?”
Riverstone Holdings LLC, a private equity firm, bought Talen Energy last year. Metropoulos said the new owners want to keep the plant open until 2022, but it needs to be economically feasible — and the $10 million yearly loans may not be enough.
“I cannot say this is the solution. I cannot even say that Talen Montana would actually try to use this particular solution because the lift is large — it’s $30 million,” Metropoulos said. “But this certainly might be one of the ingredients for a successful, positive solution for Talen Montana.”
The House Energy and Telecommunications Committee did not take immediate action on the bill.
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