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HELENA — The first hearing for the latest draft of a Colstrip rescue bill drew a crowd of supporters and opponents Tuesday.
Senate Bill 331 sets up terms for NorthWestern Energy to buy an additional 150 megawatts of generating capacity in Unit 4 of the coal-fired power plant. It also guts the Public Service Commission’s ability to regulate rates the utility passes on to customers to recover its existing investment at Colstrip and the additional 150 megawatts. Nothing in the bill obliges NorthWestern to purchase additional generation to receive the scaled-back oversight.
Proponents of SB 331 said it’s an important step to secure jobs and long-term viability at the Colstrip plant. Opponents argued the bill instead creates an incentive for NorthWestern to cease operation at Colstrip early. They said SB 331 could leaves customers on the hook for multi-million-dollar costs sunk into a plant that no longer produces energy they use.
Some with decades of experience in Montana utilities also warned of history repeating itself.
“I spent a lot of my time from 2000 to 2014 dealing with the wreckage of dereg[ulation],” said Dave Lewis, a former long-serving Montana legislator, during the hearing at the Senate Energy and Telecommunications Committee. “Don’t find yourself 20 years from now where I am now. Don’t be regretting what this may do. This is going to stick it to the ratepayers.”
Lewis referred to the Enron-led effort in 1997 to deregulate the state’s lucrative monopoly utility, Montana Power Co. The Legislature, led by Gov. Marc Racicot, voted by a healthy margin to allow state ratepayers to purchase energy on the open market. Montana Power Co. responded by selling off its generation assets and transmission lines. In 2003, the company went bankrupt.
Thousands of workers lost their jobs and pensions. Electricity rates skyrocketed. In 2007, the Legislature decided to re-regulate. NorthWestern acquired many of the defunct Montana Power Co. assets and became a monopoly utility, serving about 370,000 customers in the state.
The Public Service Commission ensures the utility remains profitable without unnecessarily gouging ratepayers.
“Look, I love those guys in Colstrip,” Lewis said. “But I think they need to be successful on the open market, not at the expense of Montana ratepayers.”
Gary Buchanan served as the first director of Montana’s Department of Commerce and worked under six governors. He said deregulating utilities was the state’s worst economic mistake, and SB 331 could have similar results.
“If … NorthWestern utilizes its extensive revenue-producing authority granted in this bill with no PSC oversight, your constituents will see significant raises in their monthly bills,” Buchanan said. “It’s the height of naiveté to believe Montana need not regulate natural monopolies.”
Sen. Tom Richmond, R-Billings, is carrying SB 331. Richmond and a lobbyist for NorthWestern both argued that an additional 150 megawatts is needed to meet Montana’s electricity demands. They pointed to this winter’s record-setting cold snaps, which drove increased demand for energy.
“It is clear the utility needs additional generation,” Richmond said. “It is, I think, important to note that people who oppose the legislation mostly just oppose the legislation. They don’t have any solutions to dealing with the capacity shortage in the system. They don’t really have any solutions to add reliable power.”
Lobbyists with the International Brotherhood of Electrical Workers, the AFL–CIO, the Montana Chamber of Commerce, the Montana League of Cities and Towns, the Montana Association of Counties, the Treasure State Resources Association, the Montana State Association of Plumbers and Pipefitters, and the Montana Association of Oil, Gas and Coal Counties spoke in favor of SB 331.
Residents of Colstrip also voiced support for Richmond’s bill.
“It’s good for Montana, it’s good for Colstrip,” said resident David Saulsbury. “If it wasn’t for Colstrip this winter there would have been a lot of people suffering. Now we can add to our motto that we’re not only clean and reliable, but we save lives.”
But Jason Brown, an attorney with Montana Consumer Counsel, told lawmakers that nothing in SB 331 would prevent an early closure at Colstrip. The plant faces abandonment by larger West Coast utility operators looking to end their dependence on coal, a fact the bill notes in its preamble.
“Right after it acknowledges the plant can close early, this bill, in the same breath, encourages NorthWestern to buy more of it,” Brown said.
An analysis shared by PSC staff on Monday found that if NorthWestern ceased its operation at Colstrip by 2027, when other operators intend to pull out, Montana ratepayers could be on the hook for a collective $267 million.
If the utility were subject to PSC review, the commission would evaluate whether those expenses were prudent. SB 331 guarantees ratepayers would cover the utility’s losses and cleanup costs at Colstrip, regardless of the closure date.
If buying an additional 150 megawatts for a dollar is a good deal for NorthWestern, Brown asked, “why won’t NorthWestern show its cards? Why not make the case to regulators?”
When lawmakers on the Energy and Telecommunications Committee put that question to Richmond, the bill sponsor said the Legislature needs “to serve a greater master.”
“I believe the Legislature has a greater obligation than to just the ratepayers,” Richmond said. “I believe that the Legislature has an obligation to people that live in Colstrip and to all of the people who use the money generated from coal resources.”
Taxes on coal provided $81 million to state and local governments in 2016, as reported by the Helena Independent Record.
Richmond went on to note that he doesn’t distrust the PSC.
“But we have people intervene in that process whose principal purpose is to shut down coal mining and coal generation,” Richmond said. “I don’t think the PSC has the resources to push back.”
When pressed for evidence of such interference, Richmond noted “environmental groups” the PSC allowed to intervene in a current NorthWestern Energy ratemaking case.
Montana Environmental Information Center is among those groups.
“I feel like he’s throwing 350,000 Montanans under the bus because he doesn’t like us,” said MEIC lead lobbyist Anne Hedges in an interview after the hearing. “He doesn’t trust the commission to [consider] our information rationally.”
Richmond is no stranger to making NorthWestern’s Colstrip case before the Senate Energy and Communications Committee. Last month, the committee voted to approve an earlier version of Richmond’s bill, Senate Bill 278. Richmond punted that bill last week after hearing multiple concerns from constituents and legislators.
He drafted SB 331 to address at least some of those worries.
Buchanan, the former commerce director, implied the process was being rushed: the Senate must approve SB 331 before an April 1 transmittal deadline, and Richmond is still proposing amendments. Buchanan said it all feels familiar.
“I see visions of the past. I think this is corporate welfare. It’s the same corporate welfare we dealt with before,” he said at the hearing. “I’m not anti-coal. I really hope coal remains part of Colstrip. I’m anti-stupid legislation. I see it again, I’ve seen it before. Here we go again.”