Washington bill incentivizes conversion of last coal plant

By Anna Simet | February 22, 2016

Washington’s last coal-fired power plant may have a new incentive to convert to a cleaner fuel, rather than closing down in less than a decade.

SB 5575, which passed the Senate on Feb. 12 and was scheduled for public hearing in the House Committee on Technology and Economic Development on Feb. 23, would provide the 1,340-MW Centralia Coal Plant with sales and use tax exemptions, in the form of a remittance of tax paid, to encourage the coal-fired electric generation plant to convert to biomass energy or natural gas.

According to the bill summary, construction of new structures or renovation of existing structures for the purpose of the conversion would be tax exempt, including labor and services to construct the facility and the machinery, as well as equipment required for the conversion. The tax exemptions would be in the form of a remittance that wouldn’t be paid until the conversion of the facility is operationally complete, but not earlier than July 1, 2020.

Supporters of the bill point to its ability to save jobs at the plant, which currently amounts to about 350 local employees, according to TransAlta. The bill has a stipulation in it to ensure that it serves to do—all of the sales and use taxes must be remitted if the number of employment positions at the plant or facility decreases by 25 percent from the previous year's employment level, beginning one year after the plant or facility is operationally complete, until Jan. 1, 2031.

According to TransAlta, the Centralia facility is a merchant plant, which means that costs such as environmental upgrades cannot be passed on to customers. It reports that it has invested more than $300 million in pollution control technology is one of the cleanest coal-fired power plants in North America.

The first of the facility’s two units is schedule for shutdown in 2020, with the second in 2025.