HELENA — A bill that would scale back the Montana Public Service Commission’s regulatory authority over the Colstrip generating plant is one significant step closer to becoming law.
The Senate voted 32-18 to approve Senate Bill 331 on second reading Wednesday. The proposal has morphed numerous times as it has worked its way through the legislative process, and a new amendment emerged hours before lawmakers met on the Senate floor.
In its most recent iteration, SB 331 still allows a utility to purchase an additional 150 megawatts of generating capacity at the coal-fired Colstrip power plant for $1. The bill requires the purchasing utility’s captive ratepayers to cover up to $75 million in costs associated with that additional generation over the next 10 years without PSC oversight of whether those costs are warranted.
Although senators took pains not to mention the utility’s name during the debate, past committee hearings and allusions on the floor made it clear the bill would benefit NorthWestern Energy, the state’s largest electrical utility.
“This regulated utility’s customers have some risk of blackout and unusually high rates because, under the current structure, they rely heavily on market power,” said the bill’s sponsor, Sen. Tom Richmond, R-Billings.
NorthWestern’s energy portfolio includes renewables such as wind, hydro, and solar, along with coal-generated power from Colstrip. Richmond said that during cold snaps this winter, renewables weren’t generating electricity, and the utility couldn’t meet customer demand with its current coal-fired generation. That pushed the company to buy power on the open market, which can be expensive when demand is high.
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“Montana needs 24-7 energy,” Richmond said. “Wind and solar are great when the wind is blowing and the sun is shining, a little less great in the middle of February when the temperature is below zero.”
Previous versions of Richmond’s bill raised alarm because the proposal also forced ratepayers to pick up the tab for NorthWestern’s current investment in 220 megawatts generated by Colstrip Unit 4 and future closure and environmental cleanup expenses. The utility wouldn’t have been required to buy additional generation to receive that perk.
An amendment approved on the Senate floor Wednesday nixed that risk. Ratepayers would now be on the hook only for future generation that NorthWestern purchases before Dec. 31, 2021.
The amendment also upped the tab that could be passed on to electricity customers. Prior to Wednesday’s floor amendment, SB 331 would have allowed the utility to recoup $40 million in costs over five years. Under the current proposal, the utility could pass along $75 million in expenses over 10 years. Any amount above that would be subject to PSC oversight.
The $75 million figure includes investments necessary to keep the plant operational.
The amended bill also mandates that ratepayers must cover any decommissioning and environmental cleanup costs tied to the 150 additional megawatts, even if the Colstrip plant closes early. Closure costs for NorthWestern’s existing share are subject to PSC approval before they can be absorbed by customers.
While Republicans spoke in favor of the bill, Democrats voiced several concerns.
Sen. Mary McNally, D-Billings, reminded lawmakers that NorthWestern Energy does not need SB 331 or the Legislature’s approval to buy additional shares of Colstrip, no matter what it might spend on the purchase.
“What they need the bill for, what this bill does, is remove regulation from additional acquisition,” McNally said. “It puts any potential risks on the ratepayers.”
McNally said she couldn’t offer any assurance to NorthWestern’s ratepayers that the bill would benefit them. She held a stack of public comments she has received since SB 331 first appeared in the Senate Energy and Telecommunications Committee earlier this month.
“I’m still waiting for the first one to come in and say, ‘this is a good idea,’” McNally said. “I think it’s a very dangerous bill for ratepayers. I think it’s a pretty sweet bill for … the utility.”
Sen. Duane Ankney, R-Colstrip, reiterated why he thinks NorthWestern needs the bill: to preempt delays and lawsuits brought by environmental groups if the utility went through the PSC process.
Ankney also urged senators to approve the bill to help protect the hundreds of blue-collar jobs that depend on the Colstrip plant and adjacent coal mine. Units 1 and 2 at the plant are set to close in 2022 due to a legal settlement. The largest owners of units 3 and 4, based in the Pacific Northwest, are looking to phase out coal-sourced energy.
Acquiring an additional 150 megawatts means NorthWestern would own half of the generation in Unit 4.
“I think [the] part of it that’s got everybody worked up … is this deal is just too good to be true. You can’t get a bag of candy for a buck, let alone 150 megawatts. They gotta be up to something. Well, they’re not,” Ankney said. “I would urge you, there is not a boogieman in this bill.”
Proponents expressed their support of using renewables to keep electricity costs low, but noted alternative sources of energy don’t always meet demand.
“It’s going to provide us with low-cost reliable energy that can back up renewables and keep us going forward,” Ankney said.
Meanwhile, opponents of the bill made clear their support for Colstrip and the coal industry in Montana.
“I understand what they have done for our state … I’m not against coal,” said Sen. Sue Malek, D-Missoula. “I am for the ratepayers. I am for the elderly trying to pay their bills every month. I am for the single mother raising her kids and trying to pay her utility bill. I am for a regulated utility.”
A final vote in the Senate on third reading is expected this week. From there, SB 331 will make its way to the House and a fresh round of debate.