NorthWestern Energy has a general electric and gas rate case before the Montana Public Service Commission and a bill in the state Senate that could hamstring the PSC's rate-setting authority for power.
On Wednesday's opinion page, NorthWestern CEO Bob Rowe defended Senate Bill 278, which has been criticized for giving his company a "blank check" to pass costs related to Colstrip power plants on to NWE's 370,000 Montana customers.
Some of Rowe's arguments about the pending legislation are misleading. Rowe wrote that his company, which is headquartered in South Dakota "would buy no more than an additional 150 megawatts from (Colstrip) Unit 4." But the bill that passed out of the Senate Energy Committee doesn't limit how much of the plants NWE could buy and in doing so avail itself of the bill's provision that all costs related to its stake in Colstrip "must" be passed on to Montana ratepayers. NorthWestern now owns 222 megawatts of Unit 4, which has a capacity of 740 megawatts as does Unit 3.
An analysis prepared by the Montana Consumer Counsel in June 2017 showed that NWE's share of Colstrip Unit 4 cost its Montana customers more per megawatt in 2016-1217 than any other energy source. Colstrip power cost us Montana ratepayers $73.85 per megawatt hour, compared with $58.17 for hydro dams and wind farms that cost us as little as $30.64 per megawatt hour, according to the consumer counsel.
In fact, over the period of 2014-2017, ratepayer charges for Colstrip 4 power ranged from $56.98 to $82.55 per megawatt hour while the spot market ranged between $21.74 and $37.54.
Yet Rowe wrote: "The cost of generating electricity from Colstrip Unit 4 is below $20 per megawatt hour." Is that what NorthWestern's cost is? The company's Montana ratepayers have borne much higher charges — higher than open market prices, higher than Montana wind farms in NWE's portfolio, even higher than the small Qualifying Facilities that Rowe said cost "about $50 per megawatt hour." (In summer 2017, the PSC ruled that QFs would be limited to charges of $30 per megawatt hour.)
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During a hearing on a House bill proposing that the state of Montana buy Colstrip power plants, lawmakers were reminded that just four years ago NorthWestern said it would only buy PPL's share of the Colstrip plants if the price for PPL's hydro dams was cut by $300 million. Back then, the plants were considered to have negative value, largely because of liability for costs of eventual shutdown and environmental cleanup, including the ash ponds. The House bill has been tabled.
SB278, sponsored by Sen. Tom Richmond, R-Billings, was running on a fast track before the transmittal break. It would eliminate the PSC's oversight regarding acquisition of additional coal-fired generating power by a utility that was already a part owner. That definition applies to only one entity: NorthWestern Energy, Montana's largest utility.
Colstrip is rightly recognized for its importance to Montana's economy. But reasonably priced power is vital to our state's economy, too.
Legislators should scrutinize SB278 and look at NorthWestern Energy's track record on rates for Montana consumers. This legislation, as approved by committee, would saddle NWE's Montana ratepayers — residents, businesses and industries — with all costs associated with the utility's present and future Colstrip investments. All financial risk would be borne by the ratepayers, not the shareholders, because SB278 guarantees that all costs "must" go into the rate base.
This imprudent legislation was on a fast track to passage last week; it's time to derail it.