by Anne Hedges and Brian Fadie
As our current political climate should have taught us, there are no rules any more. Proposals that would have been laughed out of the room just a couple of years ago are now put forward with a straight face and are defended with righteous indignation when challenged with any common-sense rebuttal. As former Public Service Commissioner Travis Kavulla was recently quoted on one of the bills described below that is currently moving through the legislative process: “This bill would be comical had it not actually passed out of the Senate Energy Committee.…I have honestly never seen a piece of legislation that is so completely ridiculous in the political balance that it tries to strike.”
SB 278 (recently killed, then resurrected as SB 331) and SB 199, both introduced by Sen. Tom Richmond (R-Billings), would unravel decades of established utility law and force customers to give NorthWestern Energy a truly blank check for increased profits.
These profits would come from unregulated and increased spending at NorthWestern’s power plants, especially Colstrip. Each bill is a variation on the same theme – NorthWestern’s 350,000 electric customers in Montana would no longer be protected by the Montana Public Service Commission (PSC) from a for-profit company raising electricity rates. Instead, in the case of Colstrip, NorthWestern customers would have to pay for any and all costs NorthWestern’s executives demand. For example, company executives could decide to install a $5 million piece of equipment instead of a perfectly adequate $1 million version. This overspending could then be repeated with every single expenditure at Colstrip – including current and future costs any utility executive desires. The PSC would no longer have the authority to protect customers from the utility’s wasteful extravagance and spending sprees.
And who will pay for these unnecessary costs? Every single NorthWestern customer: residents, businesses, schools, hospitals, local and state governments, and all the rest.
How could anyone be persuaded to vote for such an outlandish proposal? Simple. Entice legislators with vague and misleading promises of keeping an uneconomical plant running to preserve jobs and a tax base. But those promises are just a decoy and, likely, hollow.
SB 278
SB 278 contains two sections. The second section is all that NorthWestern and the proponents want to discuss. It would allow NorthWestern to buy more of the Colstrip plant but limit the price to $1. “What a great deal!” say bill supporters. NorthWestern CEO Bob Rowe and Sen. Richmond claim that NorthWestern would only buy another 150 megawatts of Unit 4 of the plant, but as written the bill would allow NorthWestern to buy all of the remaining 1,200 megawatts of Units 3 and 4. Never mind the impracticality or folly of that notion.
NorthWestern already owns a 220 megawatt share of the Colstrip plant. An additional 150 megawatts would still only be one-half of the output of Unit 4. NorthWestern never mentions how it would deal with the cost increase of operating only one unit at one-half capacity, let alone how much more it would cost customers each year when those costs are no longer divided between six owners. One of the only things SB 278 does is to make clear that whatever those increased costs may be, NorthWestern customers will pay for them all.
Finally, the proponents’ claim that SB 278 will “Save Colstrip” is also misleading. The bill does not require NorthWestern to continue to operate the plant. NorthWestern’s executives could buy more of the plant, extract exorbitant profit from its customers, and shut the plant down in a couple of years. Customers would have to continue to pay the bills for a plant that would be generating no electricity. Put simply NorthWestern portrays itself as a savior of Colstrip because that sounds a lot better than having an unsavory monopoly say that it wants the unfettered right to impose unlimited economic hardship on its customers.
But all of that puffery about saving Colstrip is a just a decoy. NorthWestern recently requested the PSC to approve increasing its customers’ electric rates. Its proposal is currently being contested (in a proceeding to which MEIC is a party) before the PSC. The first section of SB 278 would force the PSC to pass on to customers “any and all” of NorthWestern’s claimed costs for its existing portion of the plant. Whenever pushed, NorthWestern and Richmond ignore, evade, or misrepresent the clear language in the first section of the bill and start talking about the second section, which allows NorthWestern to “buy Colstrip for $1.” The most urgent danger with SB 278 is in the first section; it would bind the PSC’s hands in this and all future rate cases and force customers to pay any and all unreasonable and imprudent costs for Colstrip, which could amount to tens of millions of dollars. That’s why the bill contains a provision that says it goes into effect immediately upon passage instead of the usual effective date of October 1st. The PSC is expected to make a final decision on NorthWestern’s current proposed rate hike by mid-Summer. Coincidence? Hardly. Sen. Duane Ankney (R-Colstrip) even admitted this strategy when he recently told a reporter that “if the environmental groups — MEIC, Earthjustice, Sierra Club — want to keep their nose out of the PSC’s business, then we’d probably not have to have this bill.” SB 278 appears to be retribution for MEIC exercising its constitutional rights.
SB 199
NorthWestern’s other odious bill is SB 199, also introduced by Sen. Richmond. This bill has been grossly misrepresented by its sponsor. He says it is about contract lengths for “Qualifying Facilities” (QFs). It has nothing to do with QFs (the bill even explicitly says so). Instead, the goal once again is to remove the PSC’s ability to protect consumers from for-profit utilities gouging them.
SB 199 prohibits the PSC from changing the depreciation schedule for any of NorthWestern’s power plants (existing or future). The other Colstrip owners have already changed their depreciation schedules to fully depreciate their investments in the plant by around 2027 or 2030, because they know the facility is likely to close in that time frame, if not sooner. To protect their customers from paying for a power plant that is not operating, the utilities accelerated the depreciation. NorthWestern is the outlier, with a depreciation schedule going out to 2042.
There is also a serious unanswered question about how broad this bill actually is. The bill prohibits the PSC from “specify[ing] a contract length different from a length agreed to by parties to the contract…;” however the bill further on states that it does not apply to QFs, so it does not deal with that issue at all. Instead, the bill lists a few potential items it could apply to, such as contracts to purchase power and “equipment used to generate electricity,” but these fall under an “including but not limited to” clause, making the bill’s effect entirely open-ended and unknown.
What is clear and appalling and known to anyone who reads the bill is that SB 199 is another bald-faced attempt to remove the PSC’s ability to protect consumers from a monopoly utility which, of course, is one of the primary purposes of the PSC! The Governor has not yet committed to vetoing either of these unprecedented and terrible bills, so please contact him as soon as possible and insist he protect NorthWestern’s customers from this rogue and conscienceless monopoly!
