Rural Montana and The Future of Colstrip

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Over the past two years, I have used many of my blog posts to highlight different statistics, facts, and reports with a connection to rural areas of Montana.  This edition will discuss the connection to the Colstrip coal fired power plant.  Colstrip’s power plant are comprised of four generating units and an adjacent coal mine.  Power plant units 1 & 2, which were built in the 1970s, are scheduled to close in 2022.  The represents about 30% (or 614 megawatts) of the total power output of Colstrip.  Units 3 & 4 were built in the 1980s and each plant has a capacity of 740 megawatts.  These plants are primarily owned by a mixture of out of state utility companies, mostly headquartered in the Pacific Northwest.  The only Montana utility that has an ownership interest is Northwestern Energy with a 30% stake in Unit 4.

The merits and future of coal based electricity generation can be discussed in several different general areas.  One is the environmental concerns surrounding coal power plant emissions and the cost to keep a power plant in compliance with environmental regulations.  Another is the relative cost of power produced from coal vs. natural gas, hydroelectric, wind, nuclear and solar. Over the past twenty years electricity from natural gas, solar and wind have declined significantly. Another discussion point might be the reasons that electricity consumption in the U.S. is lower than it was 2007 and it appears to be declining after decades of somewhat steady growth.  Examining the economic impact to a specific region is also an interesting issue.

A recent report by the Bureau of Business and Economic Research at the University of Montana examine the economic impact of a possible closure of Units 3 & 4 in 2027.  The key findings indicate lower employment of over 3,000 workers, reduced state tax revenues and decreased population of nearly 6,000 people.  More than 2/3 of the jobs and population changes are in the 16 most eastern counties in Montana.  This isn’t too surprising because this region is the location of Colstrip. The average wage of the lost jobs is nearly $80,000 which is well above the Montana average.

The debate about the future of coal is way beyond the scope of this blog post but I will make a few comments about rural Montana’s economy and the potential closure of Units 3 & 4.  Colstrip Units 3 & 4 and the adjacent mine have a large economic impact on the rural areas in south eastern Montana.  The economy of rural areas have struggled to keep up with those of more urban areas over the past few decades.  This will certainly support a continuation of that trend.  The loss of 6,000 people by 2043, including nearly 1,500 k-12 students will also continue to shift the population and student base away from rural areas and toward more urban parts of Montana.  The economic impact of a full closure of Colstrip’s electricity generation would be a major blow to economy of that rural part of Montana.

On a side note, the Bureau of Business and Economic Research has a number of other interesting reports, including annual Economic forecasts for Montana.

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Joel Schumacher

Joel Schumacher, an extension economics associate specialist in the Department of Agricultural Economics and Economics at Montana State University. Much of his research has focused on understanding the economics and public policy implications of small and community scale alternative energy projects. Joel also researches and provides extension training in retirement planning, saving and investing. Helping Montanans stay up to date on the ever changing laws and regulations affecting consumer issues is an interesting and challenging area.

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