NorthWestern Energy on Friday painted a bleak picture of energy supply in the Pacific Northwest in the coming years, saying a shift away from coal will leave the region facing peak power shortages as early as 2021 and position Montana as a net importer of energy.
The utility is set to submit a draft of its new Resource Procurement Plan to the Montana Public Service Commission in February, and it has placed a heavy and costly bet on natural gas-powered generation as a major source of reliable energy while replacing the slow retirement of coal.
During a hearing Friday before members of the Montana Legislature and the PSC, however, some called the utility’s plan shortsighted, saying it fails to address the realities of climate change, the demands of the Pacific Northwest energy market, and the global shift away from carbon-based fuels.
“Montana needs to have a vision for our future, and our future is in the Western Energy Imbalance Market,” said Sen. Sue Malek, D-Missoula. “We’re becoming a regional market, and being in a regional market means we have to respond to the demands of the market, and that means solar and wind.”
Friday’s hearing offered a public glimpse into NorthWestern Energy’s vision for the future and how it builds its energy portfolio. It also struck to the heart of climate change and the role Montana will play in addressing it as the region replaces coal and other fossil fuels as the primary sources of energy.
Other states are already shifting away from fossil fuels, including Washington and Oregon, which have historically imported Montana’s coal-fired power. That will end in the coming years, leading Rep. Jim Keane, D-Butte, to speculate that “they’ll come back begging for those carbon electrons in 15 years.”
Despite such speculation, coal’s fate is likely sealed and the next chapter of energy in Montana has yet to be written. The question is, will it look to natural gas or will it transition to clean, renewable sources?
“There’s a need for new, firm energy capacity in the Northwest in the very near term in order to maintain an acceptable amount of reliability,” said Joe Stimatz, manager of asset optimization at NorthWestern Energy. “This is particularly true after they already announced the coal retirements happening throughout the region.”
Stimatz said 3,000 megawatts of coal-fired power will be retired in the coming years, but the region will need 8,000 megawatts of reliable power by 2030. If all the coal is retired by then, it would need 16,000 megawatts to replace that coal.
NorthWestern believes natural gas-fired power is the answer, and it’s willing to invest as much as $1.3 billion to build the stations to provide that power. While the company called that figure misleading, it didn’t deny its plans to bring new gas-fired power plants online as part of its future energy mix.
“For firm capacity, natural gas-fired generation is the most economic source of that capacity with the technology that’s available today,” Stimatz said. While wind, solar and battery storage can play a role, they all have limitations, “particularly in the winter on cold, windless days with limited sunlight.”
Stimatz added that gas-fired power isn’t out of line with global efforts to reduce carbon emissions.
“You can still reduce the carbon footprint by adding gas capacity,” he said. “We can lower the footprint of the region while still adding gas-fired capacity. It’s necessary to add gas-fired capacity for reliability.”
That reliability is central to NorthWestern’s plans to invest in coal-fired generation as part of its future energy portfolio. While deregulation of the energy market left consumers facing volatile prices 25 years ago, today they’re facing a greater risk, according to John Hines, vice president of energy supply.
“My view is that the risk customers are facing today are more significant than what they faced during the deregulation era,” he said. “At 7 at night in the middle of January when it’s 25 below, there won’t be enough power in the region, we believe down the road, to sufficiently serve customers without us taking proactive steps today. That’s what this plan is all about if you boil it down.”
By the end of this year, Hines said, NorthWestern will have 540 megawatts of wind and 450 megawatts of hydropower, but only 222 megawatts of coal-fired power from Colstrip. And it’s Colstrip, he said, that provides “that peak load that’s needed to serve our customers at that key time.”
With more than 3,000 megawatts of coal-fired power set to retire from the market, Hines suggested peak capacity shortages could begin as soon as 2021. When Colstrip One and Two shut down, it will remove 700 megawatts of baseload capacity from the energy market, he added.
Both units are obligated to close in July 2022.
“If Colstrip Three and Four closed, that’s another 1,500 megawatts of peak generation capacity,” he said. “If the state of Montana isn’t going to have sufficient generation to meet those kinds of capabilities and the region is going short, we’re facing risks bigger than deregulation.”
Several Republican lawmakers from the Flathead Valley and coal country in southeastern Montana lobbied NorthWestern to keep coal as a central part of its energy portfolio. Sen. Dwayne Ankey was among them, saying coal is “low cost, it’s reliable, it’s there when you hit the lights.”
But others, including Malek, said Montana is part of the regional energy market, and it can’t deny the larger shift to carbon-free sources. Puget Sound Energy is pulling out of Colstrip in 2027, as is Avista and PacificCorp. Other energy companies, including Portland General, are pulling out in 2030.
If Montana maintains the status quo and coal remains central to NorthWestern’s portfolio, it could leave “a Montana company trying to run Colstrip on its own until 2040,” Malek said. That could saddle ratepayers with higher energy costs and leave Montana in the past while the region moves to the future.
“We want to envision what the market is going to be, and we want to encourage NorthWestern to develop the large facilities that can respond to that market,” Malek said. “We see renewable prices going down. We know those lower costs will help the consumers in our state and can be sold across the Western U.S.”
Others in favor of seeing NorthWestern build a portfolio based on renewables believe Montana has already fallen behind other states in the clean-energy push. As one Bozeman resident told the committee, “For us to hold tight to the static nature of things would be an unfortunate error.”
While computer models can attempt to predict future energy needs and peak demands, others said, it cannot factor in the impacts of climate change.
The governor of Washington has already pledged to rid his state of coal by 2025 and cut fossil fuels. The Washington Legislature is likely to pass a bill stating as much. For Montana to pretend otherwise, proponents of renewables said, is foolish.
“We know the most recent science says this next decade is a critical window to reducing our carbon emissions and taking steps to reduce climate change,” said Eric Huseth, pastor at Our Savior’s Lutheran Church in Bonner. “Your actions can either accelerate Montana’s transition to the energy system of the future that’s already underway, or leave us vulnerable to the risks of the expensive and polluting technologies of the past.”