The House Energy Committee voted Wednesday to table one of the most controversial energy bills of the session, Senate Bill 379, which had inspired protests in a handful of cities around Montana, garnered thousands of comments in opposition and generated heated legislative debates.
Though many bills this session have been promoted as ways to extend the operating life of the Colstrip power plant, SB 379 was presented as crucial to any future acquisitions of coal-fired power by regulated energy monopoly NorthWestern Energy.
When the bill was first introduced, Montana Public Service Commissioner Tony O’Donnell said he couldn’t recall a bill “more tilted exclusively to the benefit of a utility and to the detriment of ratepayers.” The PSC unanimously opposed the bill, and several commissioners appeared during a Senate Energy Committee hearing to highlight their concerns.
While the bill didn’t specifically mention the Colstrip power plant, it was broadly understood to be the focus of the measure. The original version of SB 379 would have allowed current and future owners of coal-fired power assets to fully recover costs for any undepreciated value and remediation expenses from energy consumers. It would also allow the utility to recover market value for new ownership of a coal power asset, even if that asset was purchased for less than market value, and directed the PSC to allow the continued operation of coal-fired power plants “until the commission issues an order finding that the closure of the units is in the public interest.”
There was an effort to restore some of the PSC’s traditional oversight role with a series of amendments. One amendment stripped the provision allowing for cost recovery on existing coal-fired power assets. Another amended a line saying the commission “shall” allow a utility to acquire additional coal-fired power to say that it “may” do so. Even with the changes, the PSC remained opposed to the measure.
Bill sponsor Sen. Steve Fitzpatrick, R-Great Falls, argued during hearings that the bill would give NorthWestern Energy some certainty to acquire additional coal-fired power and put dispatchable power onto the grid. He also argued that NorthWestern’s acquisition of a greater share in Colstrip-generated power would be more affordable for ratepayers than NorthWestern’s construction of a new gas plant or wind farm.
Proponents for the measure included NorthWestern Energy, the AFL-CIO, the Montana Chamber of Commerce, and Westmoreland Mining, which operates the mine that supplies coal to Colstrip plant.
Senate Republicans appeared inclined to agree with Fitzpatrick and bill proponents when SB 379 went before the body two weeks ago: It passed out of the Senate on March 8, 27-21, with Democrats unanimously opposed and just three GOP senators voting against the measure.
The decision by the GOP-majority House Energy Committee to table the bill Wednesday represents a notable shift in Republican support of the bill. Rep. Geraldine Custer, R-Forsyth, was the lone committee member who voted in support of SB 379.
Lawmakers Wednesday cited a variety of concerns, including the Legislature’s ability to make informed decisions about additional power purchases that traditionally fall under the PSC’s purview and the appropriateness of the provision guaranteeing cost recovery and a rate of return. Rep. Larry Brewster, R-Billings, said it brought to mind the energy deregulation of the late 1990s, which is widely agreed to have ended badly for both Montana Power Co. employees and energy consumers in the state.
“I lived through the last time this came to pass, and it was called deregulation,” he said. “That’s not the company we’re dealing with now, but we all know what the result of that was — it was an utter disaster. I’m telling you, the whole thing smells the same thing to me.”
Other lawmakers took issue with the narrowness of the legislation in terms of the number of companies affected.
“We shouldn’t pass something that affects one tiny, little customer in an overall industry,” Committee Chair Derek Skees, R-Kalispell, said when registering his opposition. “We should pass legislation that affects the entire industry, not just one component.”
In March, Fitzpatrick told Montana Free Press that SB 379 was drafted “primarily by NorthWestern Energy.” David Hoffman, NorthWestern’s director of government affairs, confirmed that the “concepts here really come from us.”
In that conversation he said that unless the bill passes, “it’s very unlikely that NorthWestern would expand its interest in Colstrip, because it’s not a very good business model to incur that kind of risk without any rate of return or recovery cost.”
Following Wednesday’s decision, NorthWestern will no longer pursue additional ownership in the Colstrip plant, according to an email to MTFP from a company spokesperson.
Environmental organizations, several of which opposed the measure over concerns about coal power’ contribution to climate change, welcomed the committee’s decision.
“Montana ratepayers avoided a complete disaster,” said Whitney Tawney with the Montana Conservation Voters Education Fund in an emailed statement. “We’re thankful lawmakers finally came to their senses and look forward to working with NorthWestern Energy for the clean energy future Montanans want and deserve.”
“It’s a huge relief that legislators in the House refused to let NorthWestern swindle hundreds of thousands of hard-working Montanans. Hopefully NorthWestern learns that customers and legislators won’t sit idly by whenever it wants to fill the pockets of its shareholders at customers’ expense,” said Anne Hedges, the Montana Environmental Information Center’s director of policy and legislative affairs.
The rejection of SB 379 also comes just one day after NorthWestern announced that it is acquiring 325 megawatts of dispatchable electricity from a mix of sources. It’s building a natural gas plant in Laurel, has signed a 5-year power purchase agreement for 100 megawatts from primarily hydroelectric sources, and is entering into an agreement to acquire 50 megawatts from a battery storage project, the largest in Montana.
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