Editor's note: This is the last in a two-part series.
The core idea in SB 331 is for NorthWestern Energy to acquire 150 megawatts of the Colstrip Unit 4 for $1 and a greater interest in the Colstrip Transmission Grid. Much has been said and written about SB 331, including pure political fodder arousing debate between coal versus renewable energy. I supported the bill and here’s why.
Plain and simple: jobs and a secure energy future for Montana. The bill will promote reasonable mining and natural resource development and stabilize a Montana energy market that is currently under attack from other states.
As a 16-year legislator, these priorities align with representing the interests of Butte.
Natural resource development, including coal, is one of the backbones of our state’s economy and is embedded in most every aspect of the state budget. There’s coal money in every community’s library, museum, university buildings, water and sewer systems, bridges, conservation districts, state operations, you name it, including Butte.
Colstrip Units #1 and #2 will close by 2022, perhaps sooner. That can’t be changed, but there’s merit in exploring options to extend the useful life of Units 3 and 4 and, more critically, to secure more beneficial uses of the Colstrip transmission lines.
Over 350 workers and their labor unions representing Colstrip stood up for the idea, and the Colstrip community asked for help in facing their uncertain future. In Butte, we’ve experienced similar hardships, so I wasn’t about to turn my back on those families.
How does NorthWestern getting 150 megawatts for free help ratepayers? First, it precludes having to spend hundreds of millions to build a new generating facility, at ratepayer expense, to provide the 150 megawatts of 24/7/365 “dispatchable” power to meet current demands. Second, when the wind doesn’t blow and particularly on the coldest and warmest days, NorthWestern must buy power on the market. For example, in February 2019, power cost as much as $800 per megawatt hour. Avoiding market purchases during high-cost peak periods can save millions of ratepayer dollars.
Even more valuable, by purchasing a greater share of Colstrip #4, NorthWestern can get greater ownership of the 500 kilovolt transmission line. Stable ownership of the Colstrip grid opens opportunities to pursue more renewable energy projects in the future and keeps the lines available to deliver that power to customers in Montana and throughout the region.
Two other serious questions have been raised: Why would NorthWestern take on and pass through to its customers the additional remediation costs of Colstrip 4? Why does the legislation diminish the PSC’s role in reviewing and approving those costs and some operating costs? The amended version of SB 331 addresses both.
NorthWestern already owns 222 megawatts of Colstrip 4, so it’s already responsible for a share of decommissioning and reclamation costs. Adding 150 megawatts would increase that liability. But the bill does not bind NorthWestern or its ratepayers to any additional responsibility for remediation costs of Colstrip 1 and 2 nor any costs associated with Colstrip 3. Those costs, which are still undefined, remain the responsibility of the current owners. And the amended bill restores PSC review and approval of these remediation costs, as well as any operations or maintenance costs and any stranded costs if Colstrip 4 were to shut down early.
There is one deviation from standard PSC oversight: NorthWestern has asked for pre-approval of $75 million in capital costs over 10 years. The bill defines capital costs as “investments for environmental, regulatory, and safety compliance and reliability.” Opponents consider this a blank check. Supporters say that any generating facility that would be built instead of the 150 MW from Colstrip 4 would have similar capital improvement costs. For reference, NorthWestern spent $241 million in 2018 on capital improvements for its other 1200 megawatts of generating assets, 1000 of which are hydro and wind. Given the benefits that would materialize under the legislation, granting NorthWestern some certainty to recover some capital costs should be a worthy investment.
Regardless of my perspective, this bill has a long way to go. For those who don’t like it, stay vigilant and express your views. But we shouldn’t transfer our deep-seated anger and disgust with the former Montana Power Company and deregulation debacle to this SB 331 debate.That’s not helpful. That was then, and this is now. Our task now is to continue to hold NorthWestern accountable. We need to ensure the merits of this legislation are legitimate for the protection of energy customers in Montana.