FERC Rejects TransAlta’s Cost Recovery for Centralia Unit
The Federal Energy Regulatory Commission (FERC) has turned down TransAlta’s plan to spread the cost of keeping its Centralia coal plant running across a wide group of grid operators. The agency ruled on Thursday, October 1, that only utilities in the Northwest should pay, even though the unit has not generated any power under the federal order that keeps it open.
What FERC Decided
TransAlta asked FERC to approve recovery of $19.9 million in expenses tied to the first 90-day emergency order from the U.S. Department of Energy (DOE). That order was issued in mid-December and stopped the Calgary-based company from retiring the 730-MW Centralia plant in Washington at the end of 2025, as it had planned.
TransAlta’s filing also said it expected to spend a further $23 million on repairs to keep the unit available.
FERC found the proposal reached too far geographically. The plan would have charged costs to entities including the California Independent System Operator (CAISO) and the Southwest Power Pool (SPP), regions with little connection to the reliability concern behind the order.
Why Only the Northwest Should Pay
DOE based its emergency order on the North American Electric Reliability Corporation’s (NERC) 2025-2026 Winter Reliability Assessment. That report flagged an elevated risk during extreme weather in the Northwest assessment area, which covers Montana, Oregon and Washington, along with parts of northern California and northern Idaho.
FERC said that if TransAlta files a revised plan, it may only seek payment from load-serving entities inside that area.
“No Output” Does Not Mean “No Payment”
Several parties argued that TransAlta should not be paid because Centralia has not run under the order. According to U.S. Energy Information Administration data, the unit produced no electricity from January through July this year.
FERC did not accept that argument. The emergency orders state that Centralia should not be treated as a capacity resource. In FERC’s view, that wording does not stop the commission from approving compensation for the costs TransAlta took on to keep the plant operational.
The opponents included the Bonneville Power Administration, SPP, CAISO, Snohomish County PUD, other public power utilities, the state of Washington and the Washington Utilities and Transportation Commission.
Centralia’s Future: A Gas Conversion
DOE has since renewed its emergency orders for TransAlta in further 90-day periods, most recently on September 11.
Meanwhile, TransAlta plans to convert Centralia to run on natural gas. A September investor presentation puts the cost at about $600 million for a 700-MW unit, with completion expected in the second half of 2028. Puget Sound Energy would buy the output under a 16-year agreement.
The Bigger Picture: DOE’s Use of Section 202(c)
Centralia is one of several plants affected by a wider federal strategy. Since May 2025, DOE has used Section 202(c) of the Federal Power Act, under a novel reading of its authority, to block retirements at seven power plants. All but one of them burn coal.
Last month, a federal appeals court vacated DOE’s first such order, issued to stop Consumers Energy from retiring the Campbell plant in Michigan. The court ruled that DOE had defined “emergency” too broadly.
Even so, DOE has renewed orders since that ruling for units owned by CenterPoint Energy, Northern Indiana Public Service Co., TransAlta, Tri-State Generation and Transmission Association, Platte River Power Authority, Salt River Project, PacifiCorp and Public Service Co. of Colorado.
The Sierra Club estimates that keeping these units from retiring under 202(c) orders has cost about $583 million so far.
