by Tom Banse, Washington State Standard
March 11, 2026
Tax legislation Washington Gov. Bob Ferguson signed Wednesday targets the last coal-fired power plant in the Pacific Northwest.
But if the coal tax and a related climate pollution fee work as the Legislature intended, the state treasury will never collect a dime under the new law. That is because the idled Centralia, Washington, generating plant will be uneconomical to restart burning coal.
The Democratically-controlled Legislature, governor and attorney general are working in concert to thwart moves by the Trump administration to sustain coal power, specifically at the Centralia facility.
“Washington is not going backward on clean energy,” Ferguson said at the bill signing ceremony. “(This) keeps the state on track to phase out coal power as we have been planning to do so for the last 15 years.”
In December, U.S. Energy Secretary Chris Wright ordered TransAlta Corporation to keep its big generating plant near Centralia available to operate. The federal order said it was vital to keep the coal plant online to mitigate the risk of blackouts during severe winter weather and because there was a shortage of electricity in the region to meet surging energy demand.
The emergency order came a week after TransAlta announced it would fulfill a long-standing agreement with the state government to shut down Centralia’s remaining coal-fired boiler by the end of 2025. At the same time, TransAlta publicly launched a more than two-year process to convert the 670-megawatt power plant to run on natural gas.
TransAlta’s coal-to-gas conversion plan has bipartisan support at the state level. Top Democrats in Olympia disagree that there’s any energy supply “emergency” that justifies burning coal in the meantime.
Earlier this month, state Attorney General Nick Brown and a coalition of environmental groups separately filed federal court appeals to strike down the Energy Department’s pro-coal order.
“Trying to force Washington to restart a defunct power plant is not only illegal, but would also jeopardize public health,” Brown said. “Washington state will not be bullied.”
The measure signed by the governor Wednesday makes it prohibitively expensive to generate electricity from burning coal. It does so by removing tax and regulatory exemptions agreed to 15 years ago as part of the coal phaseout deal between TransAlta and the state.
For starters, the state’s hefty sales tax will be levied on any future coal deliveries. Also, from now on, TransAlta will have to purchase climate pollution allowances at the state’s periodic cap-and-trade auctions to cover emissions if it burns coal.
Until today, the coal plant was exempt from those costs based on the understanding that the independent energy generator would invest tens of millions of dollars in economic diversification initiatives in Lewis County. The cost of the carbon pollution allowances alone would be very high, given that coal has a much larger carbon footprint than the alternatives.
Alberta-based TransAlta did not offer a peep of opposition to lawmakers in Olympia over the legislation. Ferguson said he did not hear anything directly from the company either while he weighed whether to sign the bill.
Republicans in the Legislature mostly opposed the removal of TransAlta’s favorable tax treatment in order to leave the door open to the coal-fired plant coming back online during a future energy shortage.In a departure from the norm, no one stood beside Gov. Bob Ferguson on Wednesday when he signed House Bill 2367, the tax and fee revisions targeting coal power. House bill sponsors were still recovering from an all-nighter involving debate over a state income tax. (Photo by Tom Banse)
“We want to make sure we have all options on the table,” said state Sen. Matt Boehnke, R-Kennewick, “in case of a federal emergency that causes any kind of shutdown, disruption … allowing us to keep the lights on.”
The vote on final passage in the Senate broke along party lines, 29-19. There were a few crossovers earlier in February in the state House when the anti-coal legislation passed there 63-33. House Majority Leader Joe Fitzgibbon, D-Seattle, was the lead sponsor.
Coal-to-gas conversion
TransAlta’s leaders addressed the energy company’s awkward position during a discussion with Canadian stock analysts a week and a half ago. CEO John Kousinioris said TransAlta is complying with the Trump administration’s order by keeping the Centralia plant available to operate, while also laying the groundwork to convert to natural gas-fired generation by late 2028.
“With respect to the coal-to-gas conversion at Centralia, we continue to work that through in a very uninterrupted sort of way,” Kousinioris said. “It’s full steam ahead from a regulatory and planning perspective for us.”
Kousinioris said he did not expect the Centralia plant to be called upon to generate electricity in the near future because of “how flush” the Northwest is with hydropower. In spring, the regional grid typically is awash in energy due to the seasonal runoff of mountain snowmelt.
The Centralia coal plant has not fed any electricity into the Northwest grid since it burned its last lump of coal in mid-December, according to a regional power supply monitoring webpage.
The new taxes are not the only barriers to restarting the coal power plant. A second major hurdle is the state energy transition law passed years ago, which forbids Washington utilities from buying coal power as of Jan. 1 this year. TransAlta is a merchant power producer with no captive local customer base of its own on the U.S. West Coast.
There’s also the practical matter that there is little to no coal to be seen in the open-air storage yard next to the hulking power plant. Without coal, the Centralia plant can’t run.
TransAlta’s vice president for legal and external affairs said she could not predict whether the Energy Department would renew the temporary order hanging over the Centralia operation. It’s scheduled to expire next Monday.
The federal agency’s press secretary did not respond to an emailed question from the Standard about the looming expiration. Over the past month, Energy Secretary Wright has renewed similar emergency orders directed at other coal plant operators elsewhere in the country.
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