States across the west have enacted legislation over the past month to address an increasingly challenging economic outlook for coal-fired power plants and communities that rely on them. This is a recognition that renewable energy is increasingly cheaper than running existing coal-fired power plants. Colorado, New Mexico, and Montana have each passed significant legislation focused on transition planning that is fair for workers in coal communities and also financial tools to ease the financial impact of coal plants that may retire early. "Securitization," a financial mechanism that uses ratepayer-backed bonds to help refinance unpaid investments in existing power plants, has featured prominently in many of these new laws.
Here is a quick rundown of some of the state legislation:
- Colorado’s “Sunset Public Utilities Commission Act” (SB 236) includes the “Colorado Energy Impact Bond Act” that enables its utilities to use securitization bonds (called “Colorado Energy Impact Bonds”) for investments in power plants that retire early, provided that the issuance of the bonds offers net economic benefits to utility customers. The legislation also requires a large Colorado utility to achieve an 80% reduction in greenhouse gas emissions below 2005 levels by 2030 and 100% zero emission energy resources by 2050, called a “Clean Energy Plan.” The Clean Energy Plan must include a “Workforce Transition and Community Assistance Plan” to help workers and communities impacted by the retirement of coal-fired power plants. Colorado passed a companion bill, HB 1314 “Just Transition from Coal-Based Electrical Energy Economy,” that creates a state “just transition office” and requires electric utilities that retire coal plans to submit a workforce transition plan 90 days before the retirement of the facility.
- Montana’s HB 467-Securitization of Energy Infrastructure Act enables its electric utility to apply to use securitization for the retirement or replacement of an existing power plant that it operates or owns, called “energy impact assistance charges.”
- New Mexico’s “Energy Transition Act” (SB 489) includes a requirement for all of the state’s investor owned utilities to move to 100% zero carbon energy resources by 2045 and also enables their utilities to use securitization (called “energy transition bonds”) to refinance investments in coal-fired power plants that retire operations early. A portion of the revenues from the bond sale shall go towards economic development in coal communities in New Mexico and to assist displaced workers.
- Washington’s “Clean Energy Economy Act” (SB 5116) requires all Washington electric utilities to remove coal-fired electricity from their rates by 2026 and to meet 100% of its annual electricity load from renewable energy and zero emissions generation.