TransAlta's Centralia cost recovery tariff rejected by FERC
TransAlta sought US$19.9M for the first 90 days of a federal emergency order; FERC rejected the proposed allocation of those costs.
Ines Halvorsen
On Oct. 1, a cost-recovery tariff for Centralia's 730-megawatt coal unit was rejected by the Federal Energy Regulatory Commission after TransAlta Corporation TSETA NYSETAC sought payment for keeping it available. The filing sought US$19.9 million for the first 90-day period, Utility Dive reported on Oct. 2. The first DOE order took effect Dec. 16, 2025. It required Centralia Unit 2 to remain available until March 16, 2026.
TransAlta shares edged higher to C$17.46 on the Toronto Stock Exchange at 11:07:22 a.m. EDT Friday TSETA. The regulatory decision concerns payment for a federal availability directive, separate from TransAlta's agreement to convert the unit to natural gas.
FERC's Oct. 1 docket describes the action as an order rejecting tariff revisions in case ER26-2422. Utility Dive reported that FERC rejected the argument that the unit's lack of power production by itself barred compensation. The commission rejected the proposed way to collect the costs, rather than ruling that TransAlta could recover nothing.
TransAlta also expected to spend another US$23 million on repairs to keep the unit available, according to Utility Dive's Oct. 2 account of its proposal. That estimate is distinct from the US$19.9 million sought for the first emergency-order period. Neither amount is a reimbursement already received.
FERC Points to Northwest Power Customers
The proposed payer group was too broad, Utility Dive reported in its account of the FERC order. TransAlta proposed recovering some costs from the California Independent System Operator and Southwest Power Pool, while the DOE had relied on a Northwest winter reliability assessment. FERC indicated that any revised filing should seek payment from load-serving entities in that assessment area.
On Sept. 11, the DOE extended the availability directive for Centralia Unit 2. The extension runs from Sept. 13 through Dec. 11, 2026. It continues an availability obligation; it does not specify a volume of electricity for TransAlta to deliver.
"The order directs TransAlta to ensure Unit 2 of the Centralia Generating Station in Centralia, Washington remains available for operation," the DOE said in its Dec. 16 notice.
A separate TransAlta release dated Dec. 9, 2025 describes a fixed-price, 16-year tolling agreement with Puget Sound Energy. It covers 700 megawatts of gas-fired capacity through Dec. 31, 2044. TransAlta estimated approximately US$600 million to convert the plant and targeted commercial operation in late 2028. Under that agreement, Puget Sound Energy would hold dispatch rights once the converted unit operates, the release said.
At signing on Dec. 9, 2025, TransAlta said the agreement was subject to customary regulatory approvals, including Puget Sound Energy receiving satisfactory approval from the Washington Utilities and Transportation Commission. TransAlta anticipated a final investment decision after required approvals in early 2027. Its release did not disclose a price per megawatt-hour for the tolling contract.
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The next dated milestone is Dec. 11, when the DOE's current order requiring Centralia Unit 2 to remain available expires.
