The latest bill touted as a way to save Colstrip jobs may do the opposite.
Senate Bill 331, introduced by Sen. Tom Richmond, R-Billings, received strong support from Colstrip residents and unions representing workers at the coal-fired power plant and other Montana utility workers.
But SB331 doesn't guarantee that the jobs will stay. In fact, the bill creates an incentive for NorthWestern Energy to support an early closure of Unit 4.
Jason Brown, attorney for the Montana consumer counsel, explained what SB331 would allow in testimony last week to the Senate Energy Committee.
Senate Bill 331 would turn regulation on its head by protecting the monopoly from normal utility risks, instead of protecting the captive consumers, Brown told the committee.
The Colstrip boosters focused their testimony on the bill's provision allowing NorthWestern Energy to purchase an additional 150 megawatts of Unit 4 for $1. NorthWestern can already do such a deal without any change in Montana law. What SB331 proposes is to circumvent Montana's consumer protection regulations. The bill would eliminate Public Service Commission oversight for costs that the monopoly passes on to its customers. Under SB331, NWE would be allowed to recover all its claimed costs for operation, maintenance, decommissioning, remediation and undepreciated investment. The PSC would have no authority to hold NWE accountable for prudent decision making.
SB331 doesn't require NWE to increase its Unit 4 ownership share and the utility might not. NWE presently has a major electric and gas utility rate case before the PSC that doesn't propose additional acquisition of Colstrip power. Also, NWE this month filed a resource plan with the PSC that lists gas-fired generation as the least-cost option.
If NWE doesn't buy a bigger share of Colstrip power, it would still benefit from SB331. The bill would allow it to circumvent the PSC to recover costs of its current 30 percent share — if that unit shuts down before 2042. Here's how that would work:
Ten years ago, the PSC allowed NWE to add its 30 percent share of Colstrip 4 to rates at a price of $407 million based on the unit providing power until 2042. At the committee hearing NorthWestern spokesman Dave Hoffman said about $300 million of the cost remains to be paid by Montana customers. Under present law, if the unit shuts down sooner that 2042, NWE would have to go back to the PSC and justify any changes to its depreciation schedule, including any plan to continue to charge customers for a unit that was no longer providing them with power.
SB331 would entitle NorthWestern to recover its full costs of an early shutdown — without being held accountable by the PSC for meeting normal rate-making standards.
"This actually creates a positive incentive for NorthWestern to retire Unit 4 early by giving it preferential treatment in the event of early closure," Brown told the committee.
Brown and the Montana Consumer Counsel Office aren't alone in opposing SB331. The PSC's own staff analysts recommended opposition to the bill, but Commissioners Brad Johnson, Bob Lake and Randy Pinocci voted to support it anyway. Billings area commissioner Tony O'Donnell was absent from the vote. Commissioner Roger Koopman testified against the bill in Senate committee as did former PSC Commissioner Tom Schneider, former state budget director Dave Lewis, former state commerce director Gary Buchanan. Former PSC Commissioner Travis Kavulla opined against the bill in a Gazette guest opinion.
“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."
Regulation of large, monopoly power utilities is a complex field. The hectic last weeks of our 90-day legislative session aren't well suited for making regulatory decisions that may impact 370,000 Montana households, industries and businesses with higher electricity costs for decades to come.
SB331 was introduced very late, and after Richmond dropped a similar bill, SB278. Like its predecessor, SB331 trades away Montana consumer protection for protection of NWE's shareholders. Despite all the good arguments against it, this legislation is on a fast track to approval.
In the committee hearing, Richmond said: "The Legislature has an obligation greater than ratepayers" and that's "jobs in Colstrip."
If you pay NWE power bills and disagree with Richmond's statement, please let your senator and representative know by leaving messages with legislative services at 406-444-4800 or sending an electronic message through leg.mt.gov where you may click on the bar that says "message a legislator."