Renewable Energy Standard

Perhaps nothing was as potentially heart-breaking as the blows that the legislature tried to deal to Montana’s Renewable Energy Standard (RES).  Sponsored in 2005 by then State Sen. Jon Tester, the RES requires utilities to purchase 10% of their electricity from renewable energy sources by 2010 and 15% by 2015. 

Companies have to prove that the electricity comes from renewable sources by purchasing “renewable energy credits” from electricity generators.  This credit system allows a renewable electricity developer in one state to sell credits to utilities in a different state to comply with that state’s standard. 

The purpose of these laws is to create an incentive for the development of new renewable energy sources by giving them an additional saleable commodity—the credit.  The 2009 legislature acted to take most of this incentive away from developers of new renewable energy sources in Montana, but the Governor vetoed both bills that were passed.

SB 257 (Jim Keane, D-Butte).  This bill was PPL Montana’s cynical attempt to get money for nothing through a complex accounting scheme that would have made Enron executives proud.  SEE FACT SHEET ON SB 257

One of the original goals of Montana’s RES was to diversify Montana’s electricity portfolio.  With the state already heavily dependent on coal and hydropower, the legislature wanted to create an incentive for the development of new renewable resources like wind, solar, and geothermal.  So the RES omitted hydropower as a renewable resource eligible for renewable energy credits.

For the last few years PPL has been upgrading its dams across the state because it made good business sense to do so.  For example, in 2005 PPL increased the potential output at its 186 megawatt Kerr Dam by 10 megawatts.  It announced plans to almost double the output of the Rainbow Dam on the Missouri River and it made clear to the legislature that it would move forward with that upgrade regardless of the fate of this bill.  When PPL increases the potential output of these dams it can sell this cheap hydropower at current high market prices and make huge profits.  But PPL wanted more.

SB 257 would have allowed PPL to sell renewable energy credits from these dam upgrades.  But what was really underhanded was that the bill said that the first electricity generated at a dam would be considered the new renewable energy.  So, for example, the first 10 megawatts of electricity sold from Kerr Dam would have been considered as new energy, and PPL could have sold renewable energy credits for that power.  PPL would not have needed to actually generate a single new megawatt of electricity at these upgraded dams, but it would have been able to sell the credits as if it had.

Increasing the generating capacity of a dam does not necessarily mean that the dam will increase its actual generation—but PPL could have sold the credits as if new renewable energy had been generated.  These “fraudulent” credits could have flooded the market, devaluing the credit system in Montana and taking away the incentive for new renewable energy development—all to further enrich PPL.

The bill passed the Senate 39-11, and the House 57-43.  Fortunately, the Governor vetoed the bill.  PLEASE THANK GOVERNOR SCHWEITZER FOR VETOING THIS BILL!!! (Read his veto message)

SB 403 (Sen. Kelly Gebhardt, R-Roundup).  This bill, supported by NorthWestern Energy (NWE), was not much better than SB 257.  It, too, would have reduced the incentive for development of new renewable energy sources in Montana.  NWE opposed passage of the Renewable Energy Standard in 2005.  It does not like being required to buy renewable energy credits.  SB 403 would have removed the requirement for purchasing those credits in certain circumstances.  Instead, whenever a utility to which the RES applies (and NWE is the largest utility that must comply with the law) purchased energy from certain renewable energy companies, its RES would have been decreased by the same amount.  The purpose of requiring utilities to purchase the credits is to create an added incentive to develop renewable energy projects.  That incentive would have been greatly reduced by the enactment of this bill.

The bill passed the Senate 34-16, and the House 76-24, but was vetoed by the Governor.  (Read his veto message) and thank the Governor!

HB 255: (Mike Phillips, D-Bozeman).  This bill would have improved the Renewable Energy Standard by requiring that utilities purchase 25% of their electricity from renewable sources by 2025. This bill died on a 7-7 vote in the House Federal Relations, Energy, and Telecommunications Committee.

OTHER BILLS THAT PASSED

HB 27:  (Brady Wiseman, D-Bozeman) This bill would permanently extend Montana’s “universal systems benefit” charge that helps fund low-income energy assistance, energy conservation, and renewable energy projects.  MEIC position:  SUPPORT.

• Signed into law by Governor 3/25/2009

HB 179:  (Villa, D-Anaconda)  Revise renewable portfolio standard.   MEIC Position: SUPPORT

• Signed into law by Governor 4/1/09
  

HB 207: Rep. Harry Klock, R-Harlowtown. This bill would change Montana's Renewable Energy Standard (which requires utilities to acquire a small fraction of their electricity from small-scale renewable projects) by increasing the size of the projects that are considered small-scale from 5 megawatts to 25 megawatts.  MEIC POSITION:  OPPOSE.

• Signed into law by Governor 3/20/09
  

HB 208: Rep. Jesse O’Hara, R-Great Falls.  This bill would  subvert a provision in Montana's Renewable Energy Standard (which requires utilities to acquire a small fraction of their electricity from small-scale renewable projects) by delaying its implementation date.  MEIC POSITION:  OPPOSE.

• Signed into law by Governor 3/20/09
  

BILLS THAT DIED:

SB 27:  (Bob Hawks, D-Bozeman) This bill would require that report be created on conservation measures undertaken the in transportation sector 

• Tabled in (S) Highways and Transportation Committee, 1/23/2009

• Missed Deadline for General Bill Transmittal    02/26/2009

SB 37:  (Christine Kauffman, D-Helena) This bill would increase the tax credit that homeowners receive for implementing energy efficiency measures.   MEIC position:  SUPPORT.

• Died in (H) Taxation Committee    04/28/2009

HB 641 (Rep. Art Noonan, D-Butte). Energy Efficiency Standard for Utilities. This bill is similar to the Montana Renewable Energy Standard. It requires for the three largest utilities in the State (NorthWestern, MDU and Flathead Electric Cooperative) to analyze their potential for cost-effective energy efficiency and to plan to acquire all of it by 2020. 18 other states have adopted similar measures and the federal government is considering one. Energy efficiency is a critical component of any new energy policy and this bill creates an important step in the right direction.  MEIC POSITION: SUPPORT.

• (H) Federal Relations, Energy, and Telecommunications Committee Vote Failed 3/27/2009 (vote: 7-7); Missed Deadline for Revenue Bill Transmittal 3/31/09

SEE FACT SHEET ON HB 641

IN THE NEWS:

Montana Legislation Would Create Energy Efficiency Weatherization Standard (by Holly Baker, Legislative News Service, Guest Writer, 3-24-09)