The “save Colstrip” bill, requiring a larger share of the of the power plant be added to the rates of NorthWestern Energy customers without refusal, easily passed the Montana House on Monday.
Lawmakers approved Senate Bill 331 on a 62-38 vote. The bill, by Sen. Tom Richmond, R-Billings, requires state utility regulators to add an additional share of Colstrip Power plant debt to the rates of NorthWestern Energy customers should the utility increase its stake.
NorthWestern, a South Dakota-based utility with 370,000 Montana ratepayers, is attempting to increase its share in Colstrip Power Plant through a cheap purchase from one of the coal-fired asset’s other owners. Four Pacific Northwest utilities with interest in the power plant face future bans on coal power in Oregon and Washington, where customers are concerned about climate change and electricity generated by natural gas, wind and solar is increasing.
The legislation is considered crucial by Republican senators, some of whom have withheld votes to extend Medicaid coverage to 96,000 low-income workers until SB 331 passes through the House.
The bill originally sidelined Montana’s Public Service Commission, establishing debts for NorthWestern Energy customers that the PSC wasn’t allowed to question. By law the commission’s sole purpose is to balance customers' rights to a fair price with NorthWestern's opportunity to earn an authorized cost of capital set by the PSC.
House lawmakers restored some PSC power to scrutinize Colstrip debts should NorthWestern acquire a larger stake in the power plant. For example, regulators would be able to decide the plant's annual fair market value and approve a payment plan for customers related to increased Colstrip costs.
Legislators stopped short of allowing commissioners to reject the increased Colstrip share should the increased ownership turn out to be a bad deal for NorthWestern’s customers.
Before the vote, Rep. Dan Zolnikov, R-Billings, said what power was returned to the PSC made the bill better. The commission will be able to regulate the new costs for any added Colstrip share. The new debt would be added to the $407 million in depreciation costs customers are currently paying off for NorthWestern’s Energy’s 30% ownership in Colstrip Unit 4.
“It allows for the PSC to look at the current depreciation costs of Colstrip and revise the rates for this energy,” Zolnikov said. “Number two, it states that the retirement of a coal-fired generation unit must be approved by the PSC. Number 3, it allows a utility to increase ownership of a coal-fired generating unit for the price of one dollar if that ever comes.”
NorthWestern Energy has said it will increase its share of Colstrip Power Plant only if the share can be had for a dollar, a term that’s written into the bill.
Not all lawmakers were convinced NorthWestern buying more of Colstrip for Dollar Store prices would result in a good deal for the utility’s Montana customers. Rep. Tom Woods, D-Bozeman, reminded legislators that in 2007, NorthWestern paid less than $190 million for its 30% share of Colstrip Unit 4. One year later, customers were committed to a $407 million payment plan stretched out until 2042. Earlier versions of SB 331 kept customers on that payment plan even if the power plant closed early.
“I used to think that utilities make money by generating electricity and distributing it to you. That’s not really the case. Actually, utilities make a ton of money by owning stuff because they get what’s called a return on equity for the stuff that they own," Woods said. "And so, it’s an incentive to own more stuff. And that return on equity is between 9 and 11 and 12 percent."
“And that’s why anytime that one of these regulated utilities wants to purchase more stuff we should be very, very concerned.”
Rep. Denise Hayman, D-Bozeman, said NorthWestern’s dollar deal was likely to cost its customers millions of dollars more in environmental cleanup costs. As NorthWestern increased its ownership share, the cost of cleaning up pollution, like coal ash, would also increase, Hayman warned.
Montana’s Department of Environmental Quality is looking at a host of options for cleaning up toxic Colstrip ash ponds, with costs ranging from $400 to $700 million being divided up among the power plant’s owners according to share size. The bill’s attempts to limit NorthWestern’s pollution debt associated with a new share in the plant to pollution generated after the share was acquired, not before.
Hayman wasn’t buying it.
“There is trickery in this bill. This bill does not protect the ratepayer. The bill fundamentally disrupts the PSC’s oversight of the additional share of Colstrip,” Hayman said, calling SB 331 a hodgepodge of amendments extremely difficult to interpret. She warned that costs associated with transmission lines to the power plant would also result in more debt for customers. “Once the one dollar changes hands, the ratepayers are on the hook for an increased share of the $700 million cleanup of the plant.
“Montanans do not want to pay more for cleanup," Hayman continued. "Montanans do not want to bypass the PSC. This bill will not keep Colstrip open. And this bill will put the winds that blow from the northwest into the driver’s seat and leave the ratepayer on the side of the road with an empty tank and four flat tires.”
The House will vote on SB 331 again Tuesday. Barring a reversal of 13 votes from Monday’s approving lawmakers, the bill will then transfer to the Senate.