HELENA — On what’s become one of the keynote bills of the 2019 Legislature, organized labor, business lobbies and pro-coal forces lined up Monday to support a guaranteed return for NorthWestern Energy if it buys more Colstrip-generated power — while consumer advocates and environmentalists argued that the cost to ratepayers could be too high.
“Such is the NorthWestern Energy school of economics: maximize your profits by socializing the risk,” said Public Service Commissioner Roger Koopman, R-Bozeman, an opponent of the bill. “And, while you’re at it, turn the PSC into the regulatory dog wagged by the utility tail.”
Koopman testified against Senate Bill 331, which says if NorthWestern is able to buy a bigger share of the Colstrip 4 power plant for $1, it gets to charge ratepayers up to $75 million over 10 years for any capital costs — without review by the state PSC.
Supporters of SB331 said it enables the utility to make the deal quickly, with two positive outcomes: Cheap, reliable power for Montana consumers served by NorthWestern and the likelihood of extending the life of the Colstrip power plant, which has been under pressure from the market and anti-coal activism.
“Montana has made the mistake of putting us at the mercy of out-of-state entities that have little or no stake in this state,” said Sen. Duane Ankney, R-Colstrip, and a co-sponsor of the bill. “It’s time that we learn from them mistakes and take more steps to put more power over our energy future back into the hands of Montanans. And this will do it.”
Ankney and Koopman were among dozens of people who testified Monday before the House Federal Relations, Energy and Telecommunications Committee, which held its first hearing on the bill. SB331 has already been approved by the Senate.
SB331, sponsored by Ankney and Sen. Tom Richmond, R-Billings, has become one of the key bills of the session, pushed primarily by Republicans — and a few Democrats — as a way to help prolong the life of coal-fired plants at Colstrip.
Colstrip plants 1 and 2 are scheduled to close in 2022. The larger 3 and 4 plants have no closure date, but most of their co-owners, which are utilities in Washington and Oregon, have said they want to get out of coal-fired power in the near future, with a likely target date around 2027.
NorthWestern Energy, the dominant electric utility in Montana, already owns 30 percent of Colstrip 4. It has said it’s in negotiations to buy another 20 percent of the plant from one of the other co-owners, for $1.
Normally, NorthWestern’s purchase of power to serve its Montana customers would need review and approval by the Public Service Commission, which also would decide how much cost would be borne by ratepayers.
But NorthWestern has said if the purchase price is $1, there’s no debate over the purchase price being passed on to ratepayers. However, the company still would pass on the day-to-day costs of operating the plant — and, any capital improvements.
SB331 says those capital improvements would be automatically passed on to ratepayers, up to $75 million over 10 years.
A majority of the PSC is supporting the bill. Commissioner Bob Lake, R-Hamilton, told the panel Monday that he believes the premature closure of Colstrip is a greater risk to the consumer, and that the power NorthWestern would acquire is needed.
NorthWestern spokesman David Hoffman also told the committee that the power would be made available to customers at less than $20 per megawatt hour — substantially less than many other sources of power in the company’s current portfolio.
But opponents, including current and past PSC members, argued Monday that if the purchase is such a good deal, NorthWestern has nothing to fear from PSC review.
“Anything that would help Colstrip, I’m in favor of,” said Commissioner Tony O’Donnell of Billings, whose district includes Colstrip. “But it is our core value (at the PSC) to make sure rates are fair and reasonable. If we are cut out of this, there is no possible way to do our job.”
“This bill is shifting the risk to ratepayers, rather than having the company absorb the risk of this asset,” said Rep. Tom Woods, D-Bozeman. “If they want this asset. … they should purchase it and take the risk of purchasing it.”
Hoffman and others said if the deal goes before the PSC, it could take more than a year for approval — and that by then, the deal could sour.