Senate Republicans advanced their "save Colstrip" bill out of committee on a near party-line vote Thursday. Next stop, the Senate floor.
Lawmakers on the Senate Energy and Telecommunications Committee split 9-4 on advancing Senate Bill 331. The bill by Billings Republican Sen. Tom Richmond assures that if the troubled Colstrip Power Plant closes early, customers would keep paying NorthWestern Energy $407 million compensation for its 30 percent ownership of Colstrip Unit 4. The bill raises the possibility that NorthWestern, the state’s largest monopoly utility, could increase its ownership in the unit. The legislation stops short of requiring a bigger buy-in from NorthWestern, or a commitment to keep Unit 4 running.
After 10 years of payments, NorthWestern customers have about $300 million to go, witnesses told the committee earlier this week.
There was a brief exchange before the vote about whether NorthWestern’s customers are being treated fairly. It’s unusual for utility customers to pay for a power plant while not receiving electricity in return.
Sen. Sue Malek, D-Missoula, questioned the age of the plant, which shut down over air quality problems during summer 2018 and for a month the year before. She asked whether it might be better for NorthWestern’s customers if the utility invested in a new natural gas-fired power plant instead of acquiring a larger share of Colstrip Unit 4. NorthWestern has said it has an opportunity buy another 150-megawatt share of the unit.
Colstrip Sen. Duane Ankney, a Republican, said the cost of a new natural gas power plant would be “$350 million to $400 million.” He said the age of Colstrip Unit 4, now 35 years old, was irrelevant.
“You've got to understand mechanics," he said. "These shafts turn on oil. Everything there can be fixed. It’s not like it wears out. I mean, these plants will probably go 100 years. You look around at the technology, it’s basically the same thing. You got shafts floating on oil. When you got machinery that runs like that, once in a while you get a tube leak. You gotta shut down, repair the tube leak. The outage last summer they (the power plant) caught the air quality themselves. DEQ didn’t do that, (the power plant) did. They chose it. If they stayed in the power market at that time, they would have been money ahead to pay the fines and keep running. But they didn’t do it. They shut down and then went back and figured out what their problem was.”
Colstrip Units 3 and 4 were shut down in late June after failing tests for hazardous air particles, or HAPS. According to Montana’s Department of Environmental Quality, the units did fire back up and ran out of compliance for 77 days of the next quarter during some of the most energy-demanding months of the year. There have been no fines issued, according to DEQ.
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Colstrip Power Plant, one of the largest electricity generators in the northwestern United States, has been shut down for at least a month bec…
NorthWestern does have plans for new gas-fired power plants. In February, the company told investors that a 200-megawatt natural gas plant would require capital investments in excess of $200 million, less than the $350 million to $400 million for 150 megawatts Ankney suggested.
The company told investors it would need 800 megawatts of new generation by 2025. Typically, customers compensate utilities for new generation over several years of payments applied to monthly bills. Were that the case, those new payments would be on customers' bills while they continued to pay down NorthWestern’s 30 percent share of Colstrip Unit 4, regardless of whether the unit continued to run.
Public Service Commission analysts on Tuesday said the estimated cost to each individual NorthWestern customer to pay for Colstrip Unit 4's un-depreciated and remediation costs would be at least $721 if the unit were retired in 2027. That $721 cost per consumer could increase as other costs, such as environmental cleanup, are folded in the equation, according to staff.
“I guess my concern is that the plant is now, what, 35, almost 40 years old? It was closed down over several months last summer,” Malek said. NorthWestern “bought on the spot market. It was cheaper than any, I understand, any power they had, even wind and solar. Maybe occasionally it was higher this winter. I don’t know what the costs were this winter, but are we buying something that’s obsolete, that’s going to cost us a lot of money and is going to be down and we’re still paying for it? And would a new natural gas plant that provides that much energy really cost $300 million?”
Ankney assured Malek if she voted for the Colstrip bill, someday she would thank him for it.
The full Senate will take SB 331 up next week.