by Brian Fadie
On March 5, 2019, NorthWestern Energy (NWE) released its draft “2019 Resource Procurement Plan.” Creating a long-term plan is a standard activity in the utility world. It is supposed to help protect consumers from utilities making bad investments that don’t actually fit its future energy needs. It is not supposed to be controversial.
Unfortunately, due to NWE’s history of both producing slanted resource plans and bad investments by company executives, we find ourselves in a position where we must be vigilant when reviewing the plan to make sure it is an unbiased document.
In fact, NWE’s previous plan was so bad the Public Service Commission (PSC) issued comments that essentially said: go back to the drawing board. One shortcoming of that previous plan was that it overestimated the cost of wind and solar energy by modeling absurdly small-sized facilities. The company used 25 megawatts for wind and 3 megawatts for solar when those facilities can easily be sized in the hundreds of megawatts (thus achieving economies of scale and decreasing costs). Not surprisingly, the previous plan concluded the utility should meet 100% of its new electricity needs with fossil-fuel-fired gas plants. This and other serious deficiencies caused the PSC to comment: “Commission pre-approval of resources based on the analyses and results in the 2015 Plan would almost certainly not be in the public interest.” In the utility world, these are very strong words.
Now the company has produced a new (draft) plan. Is it sound? MEIC will thoroughly review it to find out, and will let our members know via e-mail, social media, and other means. A public comment period is open until May 5th and we will make sure you have the information you need to feel confident about your comments. They can be submitted under the “stakeholder comment form” found here: www.northwesternenergy.com/environment/energy-supply
The draft plan can also be found at that link, but it’s important to have some context for the plan before diving in. While the document may read like a technical, dispassionate planning exercise conducted by a bunch of engineer types, it should not be assumed this is actually the case.
It must be remembered that NWE is a for-profit company, meaning it has the same motivations as any for-profit company. It has shareholders, a stock price, and investment bankers to report to about its quarterly earnings. The level of earnings benefits the executives, not the company’s customers. Further, the way a utility makes money is by spending money. The more it spends the more profit it makes. Yes, it’s a perverse system, and one that can easily result in utilities spending money on expensive or even unneeded projects.
These profit motivations can color a utility’s decision making from top to bottom, including in the creation of a resource plan.
So, we must be vigilant: does the plan accurately estimate the cost of renewable energy and fossil fuels? Does it properly evaluate the energy needs of the utility over the next 20 years? Does it properly consider the role energy efficiency or energy storage can play?
The previous plan did none of these very well. Since then clean energy technology has continued to decline in cost and increase in performance.
As a sign the utility industry is realizing this in other states, in February one utility that had been decidedly unfriendly to renewable energy, Arizona Public Service (APS), announced it was investing in solar and battery energy storage. To quote its press release: “APS will add battery storage to its existing fleet of solar power plants, build new solar plants with storage, and use storage to deliver cleaner energy to customers at times of peak energy usage. As a result, APS customers will be able to use solar energy even after the sun goes down. Family dinners, prime-time television and bedtime reading lights will all be powered by a cleaner energy mix.”
Don’t you wish that NWE would see that same light (pun intended)?
