DOE Issues Second Emergency Order to Keep Centralia Coal Plant Online

TransAlta Corporation (NYSE: TAC) confirmed in a 6-K filing with the SEC today, that its subsidiary has received a second emergency order from the U.S. Department of Energy (DOE) mandating that the Centralia Unit 2 coal plant in Washington State remain operational.

The 90-day extension requires the facility to stay available through June 14, 2026, effectively delaying the retirement of the state’s last remaining coal-fired power plant for the second time this year.

Centralia Unit 2 was originally scheduled to shut down on December 31, 2025, as part of a landmark 2011 agreement between TransAlta and the State of Washington. However, citing an "elevated risk" of blackouts and the need to maintain regional grid stability during volatile spring weather, the DOE intervened using its emergency powers under Section 202(c) of the Federal Power Act.

This latest mandate follows an initial 90-day order issued in late 2025 that covered the winter heating season through March 16, 2026. DOE Secretary Chris Wright defended the move, stating that the plant's capacity is "essential to maintaining grid stability" and avoids unnecessary reliability risks for the Pacific Northwest.

The federal intervention has sparked a sharp legal backlash from Washington state officials and environmental organizations. Washington Attorney General Nick Brown, alongside groups such as Earthjustice and the Sierra Club, has filed a lawsuit to overturn the DOE’s mandates.

Opponents of the "must-run" order argue:

Planned Retirement: Regional energy planners have accounted for the plant’s closure for over a decade.

Environmental Impact: Continued operation of the aging facility increases local pollution and carbon emissions.

Economic Costs: Critics claim the emergency status could lead to higher energy rates for residents to cover the costs of maintaining the "decrepit" unit.

Despite the current regulatory friction, TransAlta is moving forward with plans to transition the Centralia site away from coal. The company previously announced a 16-year tolling agreement with Puget Sound Energy to convert the unit into a natural gas-fired facility.

The conversion project, estimated to cost $600 million, is designed to reduce the site's carbon footprint by approximately 50% while providing flexible capacity to the grid. TransAlta currently targets the second half of 2028 for the converted unit to reach commercial operation.

In a brief statement today, TransAlta noted it is currently evaluating the DOE order and will continue to work with both state and federal governments regarding the plant's operational status.