Fast-moving bill gives Colstrip plant to NorthWestern Energy with little oversight
(Montana Free Press) A bill would allow NorthWestern Energy to take control of the Colstrip power plant with scaled-back regulatory oversight, and it’s moving through the Legislature at lightning speed.
Senate Bill 278 would allow a utility to buy more ownership shares in the coal-fired Colstrip plant for a purchase price of no more than $1 per transfer. It would also allow the utility to pass along costs to ratepayers for investment, decommissioning, and cleanup at Colstrip for up to 30 years, even if the plant closes before then.
“I characterize Senate Bill 278 as a bill of possibilities,” said David Hoffman, government affairs director for NorthWestern, during a Thursday hearing in the Senate Energy and Telecommunications Committee. “It mandates and requires nothing. It simply provides a structural framework to allow a longer and more predictable future for the transition of Colstrip.”
While NorthWestern is not mentioned specifically in SB 278, Hoffman said the utility “is the only entity that can avail itself of the provisions” in the bill. He declined to discuss how much, if any, of the plant NorthWestern intends to buy.
Sen. Tom Richmond, R-Billings, is carrying the bill. He said the Colstrip plant is a valuable asset to Montana, calling coal a more reliable energy source than wind and solar in the state.
“This is a relatively low-risk proposal that would take an opportunity and capitalize on it, not just for the benefit of Colstrip, but for the whole state,” Richmond said.
Not everyone agrees that the bill presents minimal risks.
“I think it’s important to step back and remember that the reason we regulate public utilities is to protect consumers,” said Jason Brown, an attorney with the Montana Office of Consumer Counsel. “This bill would turn regulation around and use it to shift risks to captive consumers.”
The Consumer Counsel office was created by the Montana Constitution to advocate on behalf of ratepayers and to keep monopoly utilities like NorthWestern in check. Ultimate regulatory authority of public utilities falls to the five-member Public Service Commission.
SB 278, however, could curb the PSC’s authority to evaluate whether NorthWestern can charge ratepayers for incurred costs of any future ownership it acquires in Colstrip.
“In my reading of it, it basically doesn’t allow the commission to do anything as far as the costs at Colstrip are concerned,” said Robin Arnold, a policy analyst for the PSC. “It would essentially deregulate Colstrip generation, but still have it under a monopoly utility.”
The PSC did not provide an opinion on SB 278. Arnold said the PSC is waiting for amendments and that commissioners “weren’t sure what shape the bill was going to take.”
Colstrip is currently co-owned by six companies. Four of those owners are located in Oregon and Washington, which are phasing out energy sourced from coal and will likely have to abandon their interests at Colstrip. NorthWestern Energy has 30 percent ownership of Colstrip Unit 4 and is the only plant owner that provides power in Montana.
Falling demand for coal in the U.S. along with neighboring states’ planned withdrawal from Colstrip have created a heap of uncertainty for the plant. Owners of the adjoining Rosebud coal mine filed for bankruptcy late last year. Two of the plant’s four units must shut down by 2022 after a legal settlement with environmental groups.
Lawmakers have scrambled this session for solutions to keep Colstrip viable, from resolutions that rebuke the state of Washington for blocking an international coal port to promoting state bonding of the power plant.
Anne Hedges, with the Montana Environmental Information Center, called SB 278 a “blank check” to NorthWestern Energy.
“Our Public Service Commission will no longer have the discretion or authority to review the costs that NorthWestern wants to pass along to customers. It ‘must’ pass those costs along to customers, that’s what [the bill] says,” Hedges said. “And let me tell you, utilities across the country are pretty good at spending money when they think someone else is going to have to pay for it.”
Hedges said she’s especially concerned about funding environmental cleanup at the site once the mine and coal plant are decommissioned. The Department of Environmental Quality currently pegs remediation of the site’s coal ash ponds at between $400 and $700 million.
The current joint owners of Colstrip are on the hook for those cleanup costs as it stands, regardless of when the plant closes, but Hedges said pollution can be hard to track. That could mean NorthWestern is ultimately responsible for bigger remedial costs in the future if it takes on more ownership.
“I don’t know how you differentiate the contamination that was caused last year from the contamination that’s going to be caused next year,” Hedges said. “The ash ponds have been leaking for decades.”
The bill’s supporters argued that the main costs ratepayers would absorb would be for regular operations of the plant, such as fuel, labor and maintenance. They also said acquiring additional ownership of a plant for $1 means Montana energy consumers would be getting a bargain.
“It is a totally new concept that you get an $800 million facility for nothing,” said committee chair Sen. Duane Ankney, R-Colstrip. “In no way does this force West Coast owners out of Colstrip. [But] if they wanted to stay here, this discussion would not be happening.”
While SB 278 will likely generate further debate as it moves through the Legislature, the bill came to committee seemingly out of the dark. It was drafted on Feb. 16, introduced on Feb. 18, and had its first hearing only three days later.
“I can’t understand why we need the bill, why NorthWestern can’t negotiate whatever they’re going to negotiate and take it to the PSC,” Sen. Sue Malek, D-Missoula, said during the hearing. “I must say, it’s being rushed. No one knows what we’re talking about and nobody can answer any questions on the possible price consumers are going to have to pay.”
The Senate Energy and Telecommunications Committee voted in favor of the bill 9-4. It now moves to the Senate floor.