Montana Initiative I-184:

Good Intentions, But Not Supportable

by Brian Fadie

Initiative I-184 has been filed with the Montana Secretary of State and approved for signature gathering. The initiative seeks to make numerous reforms to Montana energy law and while its intent is appreciated, there are multiple serious policy and strategy flaws that make it ill advised to support.

Overall, it attempts too many complex reforms in a confusing and sometimes counterproductive manner to make it a good or viable initiative for advancing clean energy in Montana.

Analysis and Discussion of Initiative Provisions

  • Creating a new tax on Montana renewable energy would increase its cost and harm its prospects for out-of-state consumption. Due to Montana’s relatively small population, the potential out-of-state energy market overwhelmingly dwarfs the in-state market. For Montana to make a significant contribution to reducing the country’s reliance on fossil fuel, our renewable energy must be as cost competitive as possible. The tax created by this initiative does the opposite.

 

  • It would be incorrect to imply that because Montana created a Coal Tax Trust Fund there must also be a tax on renewable energy production. Coal is a non-renewable resource. Once it is mined and burned it is never available again. The coal trust fund was established so that future generations of Montanan’s could also benefit from the one-time exploitation of the resource. On the other hand, the development of renewable energy resources does not reduce their availability. Renewable energy can benefit Montanan’s in perpetuity.

 

  • Multiple statements and calculations made within the initiative – including its impact on coal and justification for taxation levels on renewable energy – are inaccurate. Much of this results from an assumption that NorthWestern Energy and MDU reaching 80% renewable energy levels means an 80% reduction of coal mining and combustion statewide. Montana’s energy landscape is more complex than this. A sizeable portion of Montana gets its energy from electric cooperatives. Also, much of the coal mined in Montana, as well as the electricity generated from burning coal, is sent to out-of-state customers. Voters would be asked to enshrine this inaccurate information into state law. These inaccuracies reflect a misunderstanding of Montana’s energy landscape and would undercut the credibility of the initiative.

 

  • The initiative mangles the Community Renewable Energy Project requirement by defining such projects as only those commissioned prior to January 1, 2019, making coming into compliance impossible after that date. Given NorthWestern Energy is not currently in compliance and no new projects are under construction, and the initiative could not be passed until November 2018, it appears likely it would make the requirement unworkable.

 

  • Requiring community solar facilities to be entirely constructed by licensed electricians – including such activities as grading dirt and drilling holes – is unnecessary, illogical, and would greatly increase the cost of these facilities without creating any benefit.

 

  • The initiative also includes reforms to net metering laws and potential requirements for cooperative utilities, which further increase its complexity and potential for misunderstanding of its impacts.

In addition to these policy concerns, there are significant concerns about the ability to achieve the required signatures and votes due to the high volume of issues being addressed and their thick density. As a general rule, increasing the complexity of a ballot initiative decreases its viability of passing. This initiative creates multiple new complex programs – like worker, tribal, and retiree retraining and transition accounts – while also reforming multiple existing complex programs. This all combines to make it exceedingly difficult to explain to voters (let alone for them to understand) precisely what the initiative does, why it is good policy, and whether it will accomplish its goals. And as stated above, there are open questions about all of these issues.

Conclusion 

Passing an initiative requires significant time and resources. The failure to pass an initiative can also have negative impacts on that issue area at the legislature, state agencies, in judicial proceedings, and for future ballot initiatives. It is critical that any initiative related to clean energy represents good policy while also having a reasonable chance of passage. Unfortunately, while well intentioned, the RES initiative proposed for 2018 achieves neither of these.