Labor unions lined up deep Tuesday in support of a Republican bill they hoped would save Colstrip Power Plant, while consumer advocates warned of a boondoggle that would benefit only NorthWestern Energy.
Senate Bill 331, a bill by Billings Republican Sen. Tom Richmond, assures that if the troubled coal-fired power plant closes early, customers would keep paying NorthWestern $407 million compensation for its 30 percent ownership of Colstrip Unit 4. It also raises the possibility that NorthWestern, the state’s largest monopoly utility, would increase its ownership in the unit. NorthWestern indicates that for just $1 it could buy an increased share of Unit 4 from a Colstrip co-owner that wants out.
A host of unions, the power plant’s namesake community and some members of Montana’s Public Service Commission are hopeful that if NorthWestern increases its power plant share, Colstrip might avoid early closure. Others were skeptical. Both sides made their points before the Senate Energy and Telecommunications Committee in Helena on Tuesday.
“It’s not very often that you get good news in Colstrip and this to me is good news,” said Stacey Yates, business manager of the International Brotherhood of Electrical Workers, local 1638. “This means jobs — reliable, dependable jobs, reliable, dependable energy on our power grid. This means a lot to us, and we’re in full support of this.”
NorthWestern’s lobbyist David Hoffman framed the purchase as a possibility, never saying a future purchase was a sure thing. He did say the utility needed more “baseload power” (that is, power generated around the clock).
“This would help fill the need for more 24 by seven, that is baseload energy sources, in our Montana portfolio, and extensive research shows that this is the most cost-efficient way to accomplish that,” Hoffman said. “There’s currently a shortage of baseload power for our Montana customers. This 150-megawatt share of Colstrip offers the lowest cost alternative available.”
In recent weeks, NorthWestern has cited its cost of generating power a unit to be about $21 a megawatt, although according to Montana’s Consumer Counsel the utility’s customers pay more than three times that amount once other charges are baked into the rate. All costs considered, Colstrip power has been some of the most expensive power in NorthWestern’s portfolio.
Those concerned about the bill focused less on whether NorthWestern might boost its ownership share in Colstrip and more on what SB 331 would do to NorthWestern’s customers should the power plant close early, as the bill assumes Colstrip will.
A decade ago, when NorthWestern bought a 30 percent share of Colstrip Unit 4, the plan was to deliver coal power to its customers until 2042. Until that end date, customers would be on a compensation plan, giving the utility $407 million. That plan was approved by Montana’s Public Service Commission, which is supposed to balance consumers’ right to a fair price with the utility’s guarantee to a limited return on equity.
But now it seems unlikely Colstrip Power Plant will burn that long. Other regional utilities with Colstrip ownership shares plan to be financially ready for closure within eight years. Senate Bill 331 would keep NorthWestern customers paying for Colstrip for years, even decades, after early closure. The arrangement is unusual because customers normally aren’t billed for things that don’t service them. To keep customers paying, SB331 prevents the Public Service Commission from intervening, something that utility commissions in other states have done as other Colstrip owners have prepared for early closure.
Depending on how early Colstrip closes, NorthWestern’s 370,000 customers could be on the hook for about $267 million, or $721 per customer, according to Public Service Commission staff, though analyst Zack Rogala said the cost could be more.
“I just want to make it clear to this committee that this bill is nothing about saving Colstrip; this bill is all about a blank check for NorthWestern to its shareholders,” Rogala said. “The figure of a $267 million and $721 per-customer impact is a conservative estimate. I’d just like to add to that estimate that if NorthWestern were to see premature retirement of these assets to date, that figure increases to $404 million, per-customer impact of $1,112.”
Public Service Commissioner Roger Koopman advised lawmakers to listen to PSC analysts who recommended the commission oppose SB331, concluding that consumers were being unfairly burdened with NorthWestern’s Colstrip risks and that PSC was being sidelined.
“I am not unsympathetic to what’s happening to Colstrip. In fact I’m very sympathetic. But being sympathetic doesn’t mean you pass any bill that intends to be helpful,” Koopman said. “I don’t believe this bill would be helpful at all. It hurts the ratepayers. It hurts the people of Colstrip, and it cripples, frankly, and renders irrelevant the Public Service Commission and enriches the NorthWestern Energy monopoly. This is frankly a classic example of crony capitalism and perhaps even corporate welfare. It guarantees that NorthWestern is shielded and protected from the work of the Public Service Commission, that no matter how prematurely NorthWestern shuts down Coltrip 4, every penny of cost will be passed on to ratepayers.”
Koopman was in the minority in opposing SB331 on the all-Republican PSC. Commissioners Brad Johnson, of Helena, Bob Lake, of Hamilton, and Randy Pinocci, Great Falls, all endorsed the bill. Billings commissioner Tony O’Donnell missed the vote. O’Donnell’s nonparticipation was noted by witnesses who traveled to Helena from Billings to oppose the bill.
Lake testified on behalf of commissioners who supported the bill. The commissioner for northwest Montana said the cost to consumers and limits on the PSC were worth it if Colstrip kept running.
“In the commission’s judgement, the risk to customers of a premature shutdown of Colstrip must also be considered. The commission views the premature closure of Colstrip as a far greater risk to the customers than the acquisition of another 150-megawatt share of Colstrip under the terms specified in this bill,” Lake said.
The committee took no action taken on the bill Tuesday.