Lewis County’s largest employer may be getting even bigger as a result of the passage of a bill signed into law by Gov. Gary Locke.

House Bill 2926, sponsored by Rep. Richard DeBolt, R-Centralia, repeals a requirement that 70 percent of the coal used by the Centralia Steam Plant be produced by local mines to qualify for a tax break.

The exemption from sales and use taxes on coal purchases, which became law in 1997, hinged on the owners’ agreement to use coal from local mines and control air pollution blamed for obscuring nearby Mount Rainier by installing “scrubbers” at the plant.

But out-of-state coal producers and transporters complained that Centralia Steam Plant’s tax exemption violates interstate commerce rules. Last year, three companies that produce and transport coal from neighboring states filed a lawsuit against the state Department of Revenue, saying the original law was unconstitutional because it put them at a competitive disadvantage. Backers say the bill should appease those concerns.

The law will also preserve more than 500 jobs at a nearby Lewis County coal mine, DeBolt says. Both the 1,340-megawatt power plant and neighboring coal mine were purchased last year by TransAlta, a Calgary, Alberta-based corporation. The buyer has agreed to continue the pollution controls if it also received the tax break.

The new law puts the plant back in the right, says Rich Woolley, vice president of the operation. Members of the International Union of Operating Engineers 612 also say they’re happy with the new law.

“We’ll probably end up mining 90 percent of the coal that’s used in Lewis County,” says Gordon Howins, business manager for the union. “It’s allowing us to continue to work and get the scrubbers built and provide family-wage jobs for about 600 people.” Howins predicts that union agreements with TransAlta could increase jobs at the complex.

DeBolt says TransAlta has negotiated with the union to keep most of the coal supply coming from the Lewis County mine.

Last month, the state Utilities and Transportation Commission approved the sale of shares in the plant owned by Avista Corp., Puget Sound Energy and PacifiCorp to TransAlta.

Portland-based PacifiCorp—now under the control of Scottish Power—has the largest share in the coal plant at 47.5 percent. It also owns and operates the coal mine. Avista, formerly Washington Water Power, owns a 15 percent share, and Puget Sound Energy has a 7 percent share.

The remaining partners in the plant are Tacoma Power, Seattle City Light and Snohomish County Public Utility District, each with 8 percent. Grays Harbor Public Utility District has a 4 percent interest, and Portland General Electric, which owned a 2.5 percent share, recently sold it to Avista.

Federal regulators have already approved the sale. While Oregon and Wyoming as well as Washington utility regulators have approved the sale, state commissions in Idaho, Utah and California have yet to make their decisions. If they approve the sale, TransAlta will be ready to take over the plant in about a week, says Brian Clewes, TransAlta’s senior vice president.

TransAlta bid $554 million for the acquisition, resulting in what it says is a 13 percent increase to the company’s asset base. The Canadian company says its purchase makes it the first major merchant power plant in the U.S. Pacific Northwest.

Steve Snyder, president and chief executive officer for TransAlta, says the company plans to invest additional capital in the power plant in order to ensure that it will burn cleanly.

“Our plan is to sharply reduce emissions by implementing the commitments developed through the Centralia Collaborative Decision-Making Process that led to new, binding emissions regulations. TransAlta has a proven record of taking action on environmental issues.”

The plant and the neighboring coal mine employ approximately 670 with a combined payroll of $35 million.

Rep. Gary Alexander, R-Olympia, who co-sponsored the legislation, says the new law puts the legal issues to rest and ensures those jobs.

“This lawsuit was clearly a self-serving attempt by outside interests to shut down the Centralia coal mine,” Alexander says. “We’re pleased to see this resolved within our state and for the good of our community.”

Bill Lotto, executive director of the Lewis County Economic Development Council, says the unified ownership that TransAlta is working toward will add to the area’s economic stability.—The Associated Press contributed to this report.

By Kamilla K. McClelland, Business Examiner staff