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Senate Republicans advance Colstrip bill, which critics say burdens NorthWestern ratepayers
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Senate Republicans advance Colstrip bill, which critics say burdens NorthWestern ratepayers

Despite continued warnings about burdening consumers with Colstrip Power Plant debt, Senate Republicans moved forward Tuesday with a bill shielding NorthWestern Energy from financial losses associated with the troubled plant.

Lawmakers voted 30-19 Tuesday to approve Senate Bill 379, which obligates customers of NorthWestern Energy to paying off the undepreciated book value of additional power plant shares regardless of whether Colstrip Power Plant continues to operate. The bill also provides a formula for determining the customer debt for additional shares, rather than basing the debt on what NorthWestern actually paid for additional ownership.

Simply put, Colstrip Power Plant and NorthWestern’s investment in it are in trouble. Four of the power plant’s other owners, with a 70% majority advantage, face coal power bans in Washington and Oregon starting in 2025.

NorthWestern, which bought into Colstrip in 2007 for $187 million, had originally suggested the power plant would run until 2042, but now says Colstrip will likely close in 2025 without government intervention. Customers still owe a substantial amount of debt for NorthWestern’s Colstrip share, $272.4 million according to the company’s latest annual report to stockholders, down from $407 million when Montana consumers were put on a 33-year payment plan in 2009.

Brad Molnar

Brad Molnar

The only Republican lawmaker to oppose the bill, Sen. Brad Molnar of Laurel, said he was willing to save the power plant, but not if it meant saddling consumers with years of stranded costs and no electricity. Molnar, a former utility commissioner, and the long-time advocate for the power plant, has for the past two years pointed to emails between NorthWestern and state legislators that suggest the utility plans its own Colstrip exit in 2030. He said Senate Bill 379 assured customers were paying power plant debt long after that date.

“They want to shut it down in 2030,” Molnar said. He argued that NorthWestern didn’t have the transmission capacity to move more Colstrip power if it bought more of the plant.

“And the ratepayers will be paying until 2042, though they haven’t gotten a spark since 2030,” Molnar said before the vote.

Democrat Mary McNally, a senator from Billings, said her inbox has been flooded with emails from NorthWestern Energy customers opposed to the bill.

“What the bill does is give a blank check to the utility to pretty much do whatever they want in terms of Colstrip moving forward,” McNally said.

“The ratepayers are on the hook for this. Period. There’s no exposure for NorthWestern. There’s no exposure for the shareholders. This bill is saying ‘Whatever happens, the ratepayers are going to pay for it, however that plays out,' ” she said, reading through an analysis of the bill by the staff of the Montana Public Service Commission.

Mary McNally, D-Billings

MARY McNALLY

The most critical analysis of the bill comes from the Montana PSC, which regulates NorthWestern, but would be limited by the bill when it came to scrutinizing expenses passed onto customers. Less than six months ago, the PSC rejected billing customers more than $4.4 million in Colstrip costs, concluding that NorthWestern failed to prove the costs related to 77 days of power plant malfunctions were prudent. Senate Bill 379 would relieve NorthWestern of having to prove the expenses were justified, analysts said.

It was the second PSC staff memo raising concerns about what SB 379 would do to customers. Memos by analysts are public information and the witnesses opposing SB 379 have cited the analysts' assessments when testifying against the bill.

Tuesday, on the Senate floor, Steve Fitzpatrick, SB 379 sponsor, proposed not allowing the public to see PSC staff memos on any subject in the future. Responding to a PSC analysis a week earlier, he accused the regulators’ staff of having it out for his bill. But on the Senate floor, the Great Falls Republican said it was the commissioners who had problems with the memos being public, as the memos were often cited in court cases against the PSC.

“What’s happening is these memos are being used by litigants in court proceedings. If the commission makes a vote different from the memo, they are basically being sued and people are arguing the decision is arbitrary and capricious,” Fitzpatrick said.

Steve_Fitzpatrick

Fitzpatrick

There have been several lawsuits against PSC decisions in recent years, arguing the regulator didn’t follow the law. None of the lawsuits have been based on the commission not following memos.

Fitzpatrick has been the sponsor of three bills protecting NorthWestern’s Colstrip investment. Two earlier bills, which have already passed the Senate and await action in the House, empower Montana to mandate power plant repairs by overriding the private business agreement that has governed the power plant for four decades. Montana's attorney general would force power plant owners to make repairs or face fines of $100,000 a day.

Fitzpatrick is the son of NorthWestern’s former director of government affairs, John Fitzpatrick.

Senate Bill 379 gets another vote in the Senate, most likely Wednesday, before being transmitted to the House.

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