NW Energy CEO Rowe: Utility considers climate change policy – but still relies plenty on coal

2013-07-07T00:00:00Z 2013-07-16T06:35:08Z NW Energy CEO Rowe: Utility considers climate change policy – but still relies plenty on coalBy MIKE DENNISON Gazette State Bureau The Billings Gazette
July 07, 2013 12:00 am  • 

BUTTE — Montana’s dominant electric utility, NorthWestern Energy, is already assuming the White House push for action on climate change isn’t going away, its president and CEO says.

But Bob Rowe said that doesn’t mean the company that serves 340,000 electric customers in Montana will be turning its back on coal-fired power anytime soon.

Rowe, interviewed last week at his office in uptown Butte, said the company plans to bring on more renewable power, such as wind, and continue its programs that encourage energy conservation by customers.

Yet coal-fired power, which provides about half the electricity NorthWestern sells to its Montana customers, is still reliable and relatively inexpensive, and the company has an obligation to provide low-cost, reliable power, he said.

“Our responsibility is to do what we can to manage the costs for our customers and provide a diversified resource base,” Rowe said. “With any (power source), you ask what the value is … and make a decision.”

NorthWestern has its headquarters in Sioux Falls, S.D., but the bulk of its 1,400 employees are in Montana, where it bought the utility operations of the old Montana Power Co. in 2002.

The electric-and-natural-gas utility owns some coal-fired power produced at Colstrip in southeastern Montana, as well as some small gas-fired plants, but acquires 70 percent of its power for customers through long- and short-term contracts with various power producers.

Some of that acquired power is from coal-fired producers, like PPL Montana’s plants at Colstrip, while some is from hydropower, also owned by PPL, and wind-power projects.

Rowe, an attorney and former member of the Montana Public Service Commission, declined to say whether he thinks climate change is occurring and is human-caused, and should be abated: “I’m going to stay out of the politics.”

But he and other company officials said their planning assumes that greenhouse gases, such as carbon dioxide, which is emitted by coal- and gas-fired power plants, eventually will face federal restrictions.

Still, the actual regulations will take time to develop, Rowe said, and he’s hoping that state environmental regulators will play a role as well, helping “figure out what makes sense for Montana.”

Buying new coal-fired plants or resources isn’t part of the company plan, but NorthWestern is still buying power on contract from coal-fired producers. In fact, just this May the utility agreed to a new contract to continue to buy power from PPL, which owns coal and hydropower plants in Montana.

The price for that power hasn’t been publicly revealed, but is less than what NorthWestern is paying now for PPL power under contracts that expire next year, company officials said.

“Moving forward, we’ll continue to evaluate what we see as an evolving landscape (on carbon regulation),” said John Hines, NorthWestern’s vice president of supply. “When there’s more clarity on that, we’ll be making appropriate decisions, to provide low risk and lowest cost to our ratepayers.”

The biggest electric project on NorthWestern’s drawing board is a proposed 300-megawatt power plant fueled by natural gas.

Hines said the company is identifying possible sites, with an eye toward building and bringing the plant on line by 2018.

A natural gas plant emits less carbon than a coal plant, can produce a steady stream of “base-load” power, and also can provide more power when needed to meet peak demands or fill in the gaps when wind power tapers off during times of low wind, he said.

About 15 percent of NorthWestern’s electricity is renewable power, mostly wind. Rowe said the company is contracting for a new wind project and will meet the state requirement that the utility have at least 15 percent of its power from certified renewable sources by 2015.

Rowe also defended recent steps by the company to restrict or resist contracts to buy power from small, independent wind and hydro power producers.

NorthWestern has brought a fair amount of renewable power onto its system in recent years, he said, and invested heavily in transmission and other resources to help integrate intermittent wind power into its supply system.

Yet the company doesn’t want to spend an inordinate amount of time dealing with the legalities and other details to line up contracts that provide very little power, which is sometimes more expensive than power to be bought elsewhere, he said.

Rowe said he also doesn’t necessarily buy the argument that these smaller projects offer economic development for rural areas.

“What the (company’s energy) supply group needs to be doing is putting together a sensible portfolio of all kinds of diverse resources that meet our needs to serve our customers,” he said. “From an economic-development perspective, I think that’s the most important thing that we could do.”

At the end of the day, Rowe said, the job of NorthWestern energy is to provide affordable, reliable power and natural gas for its customers – and that’s what the company is dedicated to doing.

“Public policy, to my mind, ought to be really focused on how that service is provided in the best possible way, rather than flipping that around so that utility operations are kind of in the service of public policy goals,” he said.

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