Avista Corp. will pay $2.1 million of a $25 million settlement reached recently in a Montana District Court case involving alleged damage to buildings from a leaking reservoir and contamination of groundwater caused by waste-slurry reservoirs at the coal-fired Colstrip, Mont., power plant.


The Spokane-based company, however, says it might recover part of its $2.1 million payment through insurance and also believes it has a reasonable basis to recoup its costs from its Washington and Idaho ratepayers.


Avista and four other utility companies that have ownership interests in the 2,100-megawatt plant agreed to pay the $25 million to settle a lawsuit brought in Rosebud County by 57 residents of the community. The plant burns up to 400 railcars of coal a day and generates enough power to meet the needs of two cities the size of Seattle.


What these companies, including Avista, did was build on a hill above the town a reservoir that leaks so prodigiously it raised the groundwater level beneath the original town site of Colstrip, says Jory C. Ruggiero, a Bozeman, Mont., attorney who represented the plaintiffs in the suit. He says that water from the so-called freshwater surge pond is used to produce coal-fired steam that runs the generators at the plant, but the 57 plaintiffs, almost all home owners, said the leaking pond saturated collapsible foundation soils, causing buildings to settle and leading to widespread damage.


Also, Ruggiero says, the plant uses wet scrubbers that spray water through flue gasses from the burning coal to trap combustion byproducts in wet slurry, which is pumped to large waste reservoirs.


The residents alleged that the power companies had known for years that their waste reservoirs were leaking, but that they failed to prevent those leaking reservoirs from contaminating the groundwater aquifer beneath a subdivision just north of Colstrip, Ruggiero says.


The claims in the case had been consolidated, and the case was set to go to trial on June 2 in Forsyth, Mont., the county seat of Rosebud County, when the settlement was reached, and the six-week trial was averted, Ruggiero says.


Avista says in a disclosure statement that it owns a 15 percent interest in units 3 and 4 of the Colstrip plant and an 11 percent interest in the freshwater reservoir. It says the plaintiffs allege contamination and trespass damages resulting from several of Colstrips process ponds, most of which are for units 1 and 2 of which Avista Corp. has no ownership interest. The owners of Colstrip have undertaken certain groundwater investigations and remediation measures to address groundwater contamination. These measures include improvements to the lakes and ponds of Colstrip.


In addition to Avista, the other defendants in the suit included PPL Montana LLC, of Billings, Mont., which also is the plants operator; Puget Sound Energy, of Bellevue, Wash.; Portland General Electric Co., of Portland, Ore.; and PacifiCorp, also of Portland.


Those utilities still face additional litigation, and so does NorthWestern Energy LLC, of Sioux Falls, S.D., which is listed by Colstrips Web site as an owner in the plant. In that suit, also brought by Ruggiero, two families that own property near the holding ponds that serve units 3 and 4 sued the six owners of the plant and Hydrometrics Inc., a Bozeman environmental consulting firm, in Montana District Court, alleging that the ponds and remediation activities had affected their property adversely, Avista says.


Avista says those claims werent covered by the $25 million settlement, and while the outcome of them is uncertain, the company doesnt expect it will suffer a material adverse effect from the claims, based on information currently known by its management.


Contact Richard Ripley at (509) 344-1261 or via e-mail at [email protected].