October 3, 2026 - Federal regulators have rejected TransAlta’s proposal for allocating the costs of keeping Washington’s Centralia coal-fired generating unit available under federal emergency directives, while allowing the company to submit a revised plan.

The Federal Energy Regulatory Commission’s October 1 decision concerns $19.9 million in expenses associated with the Department of Energy’s initial 90-day order. Issued in December 2025, that directive prevented TransAlta from retiring the 730-megawatt unit at the end of that year.

TransAlta also projected another $23 million in repairs to maintain the unit’s availability.

FERC determined that the proposed allocation reached beyond the region identified as needing Centralia’s reliability support. TransAlta had sought to assign some expenses to the California Independent System Operator and Southwest Power Pool.

The commission said any revised proposal should limit recovery to electricity suppliers serving the Northwest assessment area identified in the North American Electric Reliability Corporation’s winter reliability report. That area includes Washington, Oregon and Montana, along with portions of northern California and northern Idaho.

DOE had cited the assessment’s warning that extreme weather could create electricity-supply risks in that region.

Although Centralia generated no electricity through July 2026, according to Energy Information Administration data, FERC rejected the argument that its lack of output automatically disqualified TransAlta from compensation. The commission found that expenses incurred to maintain operational readiness could qualify for recovery even though DOE’s orders excluded the unit from being treated as a capacity resource.

Opposition to TransAlta’s proposal came from organizations including the Bonneville Power Administration, Southwest Power Pool, California Independent System Operator, Snohomish County Public Utility District, other public power utilities and Washington state officials.

DOE has issued successive orders under Section 202(c) of the Federal Power Act to retain Centralia, with the latest directive issued September 11.

Meanwhile, TransAlta intends to convert the unit to natural gas. Its September investor presentation outlined a roughly $600 million project producing about 700 megawatts, with completion anticipated in the second half of 2028. Puget Sound Energy would purchase the output under a 16-year agreement.

The Centralia decision comes amid a broader dispute over federal intervention in power plant retirements. Since May 2025, DOE has used emergency orders to delay generating-unit closures at seven plants, six of them coal-fired.

In September, a federal appeals court overturned the department’s first order retaining Michigan’s Campbell coal plant, finding that DOE had interpreted its emergency authority too broadly. The department subsequently renewed directives affecting generating units owned by several utilities, including TransAlta, Tri-State, CenterPoint Energy and Northern Indiana Public Service Company.

The Sierra Club estimates that retaining generating units under these directives has cost approximately $583 million.

For Centralia, the immediate issue remains how eligible expenses should be distributed among regional electricity suppliers. FERC’s decision leaves TransAlta a path to seek compensation through a more narrowly targeted filing.