When Northwestern Energy announced plans to repurchase Montana hydroelectric dams for $900 million, it sounded like a logical move.
Northwestern would buy back the hydroelectric dams from PPL-Montana and reunify the assets that had been smashed apart during the deregulation of the old Montana Power Co.
Northwestern officials are touting this move as adding a renewable, green and reliable source of energy to Montana’s power portfolio. Leaders are also hoping the acquisition of the hydropower helps erase the blunder that was power deregulation.
We have said that hydropower makes sense for Montana. It would not only add diversity to sources of energy for Northwestern, the power could be used to offset market volatility. And, it would bring Montana hydropower back under the control of a Montana company.
But at last week’s Public Service Commission hearing, tough questions were raised about acquiring the dams and the $900 million price.
If the acquisition is approved by the PSC, it would allow Northwestern Energy to pass along the acquisition cost of the dams to consumers. For the typical Northwestern customer, that would mean about $60 per year.
Montana Consumer Counsel Bob Nelson pointed out that if the rates are approved, it would make power rates in Montana among the highest in the region.
Northwestern officials say acquiring the hydropower means the company would need to purchase less power on the open market, and have more generation capability internally. That, company officials argue, would mean customers wouldn’t get socked with extremely high bills during power spikes.
However, Nelson pointed out those spikes in power prices are usually short lived and do not necessarily make up for high power rates, month in, month out.
At the PSC hearing, Nelson proposed the commission limit the amount of money Northwestern could pass along to consumers if the sale is approved. Nelson contends that PPL-Montana is asking a retail price for the dams — yielding no discounts — and $900 million isn’t exactly a bargain price for the hydropower.
We believe Nelson’s point is a good one. He’s not arguing that Northwestern Energy shouldn’t be allowed to buy back the dams; he’s not even arguing that the transaction should be stopped. Instead, Nelson, on behalf of Montana power consumers, says that the company needs to own more of the risk and burden.
No one likes a power bill with surprises. And everyone worries about spikes in power prices, especially as we enter into the dog days of summer. But should a few tough months every once in awhile drive power rates up permanently?
The fear of a worst-case scenario may be an unrealistic reason to pass along costs that will certainly pinch the pocketbooks of many Montanans.
So, we, along with Nelson, think it’s the right move to allow Northwestern Energy to purchase the dams and add them back, just not at any price.
Being able to tout having hydroenergy is something to be proud of.
Having the highest energy rates in the region?
That’s something different.
So is this a case of power to the people? Or is Northwestern trying to stick it to us?