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Bill to boost Colstrip and coal-fired power blasted by critics

Spells out how NW Energy can charge for power
Colstrip plants.jpg
Posted at 5:07 PM, Mar 25, 2021
and last updated 2021-03-26 17:57:33-04

Consumer and environmental advocates teed off Thursday on a new bill meant to help the state’s biggest utility buy more coal-fired power from the Colstrip power plants, saying it would lead to grossly overcharging Montana electricity consumers.

“It’s ludicrous,” said former state Public Service Commissioner Tom Schneider. “If (NorthWestern) acquires additional shares of unneeded power … the ratepayers, under this carve-out legislation, would be responsible for everything.”

Schneider is talking about Senate Bill 379, introduced last week and scheduled for its first hearing next Tuesday, before the Senate Energy Committee.

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State Sen. Steve Fitzpatrick, R-Great Falls.

Sen. Steve Fitzpatrick, R-Great Falls, the sponsor of SB379, told MTN News Thursday he believes his bill could actually lead to lower costs for NorthWestern customers over the long term.

If NorthWestern is prompted to buy a greater share of the Colstrip 3 and 4 plants, it wouldn’t have to build more expensive newer plants, such as natural gas-fired plants, to fulfill power-production needs for its customers, he said.

Yet Schneider and others said the bill enables NorthWestern to charge ratepayers – with virtually no review by the PSC – a grossly inflated price for any newly acquired Colstrip power, when cheaper, cleaner power is available.

They also said it’s time for NorthWestern to acknowledge that coal-fired power is not the future of energy production in the region and that the last two Colstrip plants in southeast Montana are likely to shut down within the next several years.

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Former state Public Service Commissioner Tom Schneider.

“If Colstrip continues to operate, it will be an island of coal in a sea of renewables, from Colorado to the Pacific Ocean,” said David Schlissel of the Institute for Energy Economics and Financial Analysis.

Schneider said the cost of Colstrip power that NorthWestern is currently selling to its Montana customers is about 7.4¢ per kilowatt-hour. Bids for recent wind-power projects are in the range of 2¢ to 2.5¢ per kwh, he said.

At least three of the utilities that co-own Colstrip – Puget Sound Energy, Avista and Portland General Electric – plan to get rid of their share of the plants, because they must abandon coal-fired power and move to cleaner energy.

Two Colstrip plants closed last year. A closure date hasn’t been scheduled for Colstrip plants 3 and 4.

Fitzpatrick acknowledged that his bill, and others before the 2021 Legislature, are meant to keep Colstrip operating well into the future.

“With all this stuff that’s going on out in Washington and Oregon, I’m just worried that it’s eventually going to shut down that plant and destroy that asset,” he said. “The purpose (of the bill) is to enable us to continue to obtain reliable, affordable electricity from the Colstrip plants.”

Opponents of SB379 – and a March 19 memo by the staff of the Montana Public Service Commission, which regulates utilities -- said the bill would not lead to affordable electricity.

Instead, they said it allows NorthWestern to acquire additional Colstrip power and then charge ratepayers based on the recovery cost of Colstrip power it acquired 12 years ago – a cost that most observers agree was highly inflated and now is well above-market.

The memo also said under SB379, Montana customers of NorthWestern would be charged for replacement power if the plant goes down, regardless of whose fault it is, and could be on the hook for greater cleanup costs, once the plant shuts down.

“The bill dismantles the regulatory balance between NorthWestern and its customers, by guaranteeing investment returns to the utility while transferring all risk to ratepayers,” the memo said. “… (It) mandates that a deliberative and evidence-based process may not be used in the allocation of cost responsibility and determination of rates for (Colstrip power).”