PSC staff: Northwestern’s Colstrip bill could cost ratepayers more

Customers would pay an extra $56 to $86 a year for power if NorthWestern Energy increased its ownership of Colstrip Unit 4 as it proposed to do in 2020, according to an analysis of Senate Bill 379 released Friday by Montana Public Service Commission staff.

During the life of the plant, estimated at 21 years, that would be $611 to $1,250 per customer, said the April 9 memo. Staff also noted those figures don’t include operations, fuel, capital equipment to fix the old facility, or remediation and cleanup.

In the memo, the PSC legislative electric team evaluated the most recent version of the bill approved last week by the Senate. SB379 aims to encourage coal-generated energy production.

Is that $56 — plus operations, fuel, fixes, and any cleanup — a good deal for customers?

Is $86 a bad deal?

And who decides?

As drafted and amended, one problem with the bill is its ambiguity, so it’s hard to know how any deal would play out, according to the PSC analysis. But what’s clear: The memo said the legislation guarantees financial security for the utility, and it places risk and cost responsibility on ratepayers.

“Staff emphasizes that the ambiguity of SB379, particularly in New Section 1, prevents a definitive interpretation of the bill’s intent and an unequivocal evaluation of its consequences,” the memo said.

Last week, the Senate approved the bill 27-21 on third and final reading. This week, it’s scheduled for a hearing Wednesday in the House Energy, Technology and Federal Relations Committee.

Sen. Steve Fitzpatrick, R-Great Falls, is sponsoring the bill, and with it, he said he’s trying to solve a problem for the power company, and a potential problem for people who want assurances their lights will turn on when they flip the switch. Basically, on bad weather days, NorthWestern needs more access to energy supplies that are a sure bet.

“There are not a lot of readily available sources of dispatchable power,” Fitzpatrick said Monday. Dams, gas plants and coal are among them, but he said power from solar farms and wind farms isn’t always immediately available. “Unfortunately, this has become somewhat of a debate between renewables and more fossil fuels, but you have to have a mix of both to keep the lights on in these peak times.”

In December, NorthWestern Energy issued a call for proposals to meet additional capacity and fill its energy deficit. In an announcement, the company said additional power — or resources — would come online for customers in 2023. 

“It’s going to take a while for those things to come online,” Fitzpatrick said. “NorthWestern can get a share of Colstrip or a power purchase agreement off of Colstrip now. I think that’s the thing.”

Jo Dee Black, with NorthWestern, said the company supports SB379: “Right now, our concern about capacity and adding that to our portfolio is that we are trying to reduce the risks associated with markets, which are high prices, and now also the availability (of energy). Is it even available to purchase on the market?”

Usually, the Public Service Commission would peel apart a proposed purchase as part of its job regulating a monopoly to ensure the power company was earning enough and customers weren’t paying too much. The PSC staff memo notes an amendment to the bill “took a small step toward retaining the Commission’s regulatory oversight.”

However, the memo also said the commission wouldn’t be able to evaluate cost recovery, and “significant problems” remain. Generally, staff said the bill “removes much of the authority of the Commission — or any other public body — to review and approve the terms of an acquisition.”

“Staff reiterates its concern that, in any plausible interpretation of SB379, a just and reasonable balancing of interests between utility and ratepayers is precluded, as utility customers will bear most of the burden of both risk and cost for the described Colstrip acquisition,” the memo said.

Fitzpatrick disagreed with that assessment and said arguments to the contrary are “nonsense.” He said he wants to give the newly elected commissioners a chance, but he was skeptical about PSC staff analyses and suspects NorthWestern isn’t getting a fair shake (he earlier tried to make PSC staff memos private, but that amendment failed).

“The problem is just from what I’m hearing, that there’s a feeling now with many people that the PSC staff does not treat NorthWestern fairly,” Fitzpatrick said. (His father, who is retired, worked for NorthWestern, but Fitzpatrick said his sponsorship of the bill is related to his relationship with fellow lawmakers, not his father, and he said the two did not discuss the legislation.)

In March, the five elected Public Service Commissioners voted unanimously to oppose Senate Bill 379, according to meeting minutes on the PSC’s website.