MTPR

Bill To Reduce Oversight Of Some Colstrip Costs Advances In Montana Senate

Mar 22, 2019

A rewritten Republican plan aimed at protecting the future of the coal-fired power plant in Colstrip is moving forward. But concerns remain about its potential impact on Montanans’ electric bills.

When the so-called Montana Energy Security Act of 2019 was first introduced it drew comparisons to the deregulation of the Montana Power Company in the late 1990s, which skyrocketed electric bills across the state.

Senate bill 331 passed out of the Senate Energy and Telecommunications Committee Thursday afternoon on a 9-4, mostly party line, vote.

"I think it’s a good deal," says Sen. Duane Ankney.

Ankney is the Republican chair the energy committee. He’s also a former coal miner from Colstrip.

"Of course I’m passionate about what goes on there. But I’m also passionate about the revenue that comes into Montana from those plants, and keeping people working."

Sen. Duane Ankney (R) - Colstrip.
Credit Mike Albans / Montana Public Radio

The future of the Colstrip power plant, and ones like it across the country, is uncertain as energy producers make the switch to renewables and cheaper natural gas. West coast energy customers are also demanding less carbon emitting power, which could continue to push utilities companies with a stake in Colstrip out of the plant.

Montana’s Senate Bill 331 encourages NorthWestern Energy to take on a bigger ownership share of Colstrip, up to an additional 150 megawatts that other utilities may no longer want. 

There’s no law against NorthWestern making that purchase now, which proponents say could cost as little as $1. Montana law already requires the monopoly utility to make investments to benefit electric bill payers.

David Hoffman, the lobbyist for NorthWestern, says owning an additional share of Colstrip would help fill the company’s need for power that can be turned on at anytime.

"Extensive research shows that this is the most cost effective way to accomplish that," Hoffman says.

While the bill does not create the authority for NorthWestern to buy more of a share in Colstrip, it does reduce the amount of oversight that public regulators will have over how the costs associated with NorthWestern’s work at Colstrip are passed on to its customers.

Sen. Mary McNally (D) - Billings.
Credit Courtesy Montana Legislature

"I think it’s horrible precedent in terms of utility regulation," says Sen. Mary McNally, a Democrat from Billings.

Even after Senate Bill 331 was amended to restore some of the Montana Public Service Commission's current oversight, McNally said the bill could still pass unreviewed costs on to NorthWestern ratepayers.

"I don’t think it’s good for the ratepayers. I think the costs have been entirely shifted, and the risk, from the utility to the ratepayers."

Jason Brown, with the Montana Consumer Council, says the bill that passed out of committee Thursday does take a significant step in restoring some public oversight over some of the costs NorthWestern could pass on its consumers if Colstrip closes before 2042.

"But it does continue to exempt from any regulatory oversight any decommissioning and remediation costs, both for NorthWestern’s existing share and any additional share they might purchase," Brown says.

Two of Colstrip's older units, which NorthWestern Energy does not have a stake in, will close no later than 2022 as a result of a settlement in a federal lawsuit settlement over the Clean Air Act.

Backers of Senate Bill 331 say it would guarantee that Colstrip remains a reliable source of electricity to keep heaters running even in the coldest of winters.

"It’s not very often you get any good news in Colstrip and this, to me, is good news," says Stacey Yates, who represents an IBEW electrical workers union local in Colstrip.

Labor groups, local government organizations, and the Montana Chamber of Commerce came out in support of Senate Bill 331 during its first public hearing earlier this week.

Republican Tom Richmond from Billings, the bill’s sponsor, says the bill has goals other than protecting energy bill costs for NorthWestern’s customers.

"I believe that the Legislature has a greater obligation than to just the ratepayers. I believe that the Legislature has an obligation to the people that live at Colstrip and to all of the people that use the money  generated from coal resources, including coal generation, in our state."

According to analysis from the nonpartisan Legislative Fiscal Division, the full decommissioning of the Colstrip power plant could result in an estimated $51 million loss to state revenue.

Four of the five members of Montana’s all Republican, elected Public Service Commission are supporting the so-called Montana Energy Security Act, against the recommendation of their staff.

A memo written by nine staff members says the proposal disrupts the regulatory balance between the utility company and its customers, and allows the company to pass costs directly on to utility bill payers without review. The staff have not yet updated their analysis since the bill was amended and passed out of committee.

The full Montana Senate is expected to debate the policy in the coming days.