Save Colstrip? At what cost to us?

Brad Molnar
Thursday, March 28, 2019
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Political Potpourri

This legislative session two bills (SB 278 and SB 331), both dubbed “Save Colstrip,” have seen the inside of a hearing room. Sen. Tom Richmond sponsored both. Both were turned into drafting by Sen. Duane Akney in November of 2018. Both blind the PSC from considering massive expenditures/risks while requiring the PSC to charge rate payers for the spending. Both bills have the same preambles and both are just a few paragraphs long.

Senate Bill 278 was blunt force trauma to ratepayers. It said consumers were on the hook for all costs of hypothetical generation even if it were never used. Decommissioning and site remediation costs had to be 100 percent recovered from NWE rate payers removing any interest NWE would have in cost control or defending the plants from law suits.

As it became clear to even the unenlightened that Senate Bill 278 shifted 100 percent of risk from NWE shareholders to NWE rate payers it became a political liability. Thus SB 278 was tabled at the request of sponsor, Tom Richmond.

Like a sphinx from the ashes SB 331 was brought forward by Richmond with similar provisions allowing NWE to buy 150MW of additional generation for the bargain basement price of $1; IF a seller could be found. No mention of which corporate board would vote to sell a $200M plant for $1 and reject an offer for $2 plus closing costs and pay all site remediation costs. Actually, if the area is declared a Super Fund Site, liability will be doled out by federal decree and the testimony/wording on these bills will be ignored. Montana ratepayers might inherit hundreds of millions in costs a few years down the road, and never receive a spark, which may explain why a current co-owner may find a $1 selling price defendable to their shareholders.

Senate Bill 331 is marginally better even if more theatrically than actually. Senator Richmond’s SB 278 was pitched as such a good deal that the Public Service Commission should not be allowed any input other than rate increases. SB 331 says that the PSC can review costs related to the acquisition after they exceed $40M. In other words NWE can do any questionable but profitable actions up front and submit the ones sure to be approved after the $40M threshold has been reached. Instead of NWE being able to unilaterally abandon Colstrip 4 for reasons of expedience SB 331 specifies the PSC may approve or disapprove a premature retirement; this modifier is a current PSC capacity.

The need for unbridled cost recovery for transmission upgrades in SB 331 is unexplained. Currently NWE has a rate case for $38.5M in transmission upgrades to enhance renewable energy compatibility. In the new SAVE COLSTRIP bill NorthWestern Energy can invest in their current system 500kv system up to its full book value. The PSC can only pass on the cost of investment, interest, and profit without review.

I understand NWE’s excitement at the prospect of becoming an unregulated monopoly. But it appears their focus is really to have rate payer’s shoulder the costs of NWE becoming a natural gas base-load generation entity and acquiring additional renewable resources thus allowing them to capture production tax credits from the federal government. Senate Bill 331 does not “save Colstrip.” It just outlines how NWE can exit the coal fired energy business without debt.

The rationales for not allowing the PSC to protect rate payers have varied from “I don’t know” to it is important to keep the Sierra Club from filing suits and delay or nix the acquisitions. Yes, the possibility of an environmental law suit always looms. With Montana Supreme Court Justice Beth Baker’s husband having been a lobbyist for the Sierra Club and Federal Judge Brian Morris of Great Falls delaying pipelines, coal, and oil projects across the west based on his personal beliefs in global warming there is not a safe way forward.

But to try and become an unregulated monopoly with a captive market through strong arm political tactics and illusion is not the way. Circumventing the requirement for public analysis of long term resource planning, and state energy procurement processes, seems more like inviting a law suit that could prematurely close Colstrip Four rather than protect it through following prudent procedures.

Brad Molnar served in the Montana legislature for eight years and on the Public Service Commission for eight years.


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