Bushman: PSC has compounded regulatory risk with recent decisions

By Kirk Bushman

The tradition of the Public Service Commission is to hold public listening sessions and formal hearings in the communities where the utilities operate and where the customers are affected.  I have enjoyed staying in touch with the people of my district and all across Montana.

Upon my election, I was appointed to represent Montana on the Organization of MISO States (OMS), a regional transmission organization made of state regulators from 15 states. In my 2nd year, I was elected secretary of OMS. In addition, I sit on the board of directors for Mid-Continent Independent System Operator (MISO). In 2016, I was appointed to Gov. Steve Bullock’s Clean Power Plan Advisory Committee. I also participate in the Western Commissioners Conference and National Association of Regulatory Commissioners. The out-of-state travel that came with the participation in these organizations was unexpected; however, it is through these organizations that I can help stop regulation coming from the federal government.

PSC decisions have added to the regulatory risk that federal agencies, EPA and FERC, have taken to a critical level. The PSC should create a stable regulatory environment that allows the utilities to address their customers’ needs in the least cost manner. Instead, the Montana PSC has compounded this regulatory risk with recent decisions.

One PSC decision that will cost ratepayers is the repeal of the Competitive Bid Solicitation rule. Renewable projects termed “Qualifying Facilities” are gaming federal laws under the Public Utilities Regulatory Policies Act to force their way into Montana utility rates. These projects are expensive and, by federal law, can’t be turned off. The result is an oversupply of electricity which gets sold into the market at a loss and who pays that loss? The Montana ratepayers.

Recently, the commission voted 3-2 (Bob Lake and myself dissenting) to deny NorthWestern Energy recovery of $8 million from the CU4 outage. The three commissioners – Brad Johnson, Travis Kavulla and Roger Koopman – were the only commissioners of four states (14 commissioners total) in the northwest to deny these recovery costs. NWE reciprocal agreement and property insurance reduced what could have been a $25 million expense to the ratepayers down to $8 million. The result is that NWE and other utility companies now get to purchase outage insurance. This affects all Montana utility rates.

The idea of outage insurance is analogous to car insurance that covers oil changes, windshield wipers, and tires. And who pays for that insurance? The Montana ratepayers.

This latest judgment to disallow the replacement power cost resulting from the CU4 outage is a good example of shortsightedness. This decision has credit rating agencies looking hard at the regulatory risk to NorthWestern Energy. Two recent publications by Moody’s Investor’s Service and the Williams Capital Group have serious concerns about the decision reached by the PSC. This will increase the cost of debt to NorthWestern Energy, and who pays that increase? The Montana ratepayers.

I was honored in 2012 when elected to the commission. My engineering background and experience has been invaluable working on the commission. I will continue to fight for inexpensive, reliable utilities for the people of Montana.

Kirk Bushman serves on the Montana Public Service Commission.