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HELENA - A consultant's report says the construction costs of NorthWestern Energy's proposed power line in southwestern Montana aren't likely to be folded into rates paid by the utility's Montana electric customers.

But state utility regulators said Tuesday they're not sure of that result, and asked staff to research the issue further.

"My concern is that, so far, the indications from the Federal Energy Regulatory Commission are that they're inclined to roll (Montana) customers into some sort of obligation for this," said Public Service Commission Chairman Greg Jergeson, D-Chinook. "We want to examine what FERC might do, and what the commission can do to protect (Montana) customers."

Jim Paine, a staff attorney for the PSC, said the federal power agency may have the power to allocate the costs of constructing new power lines to local ratepayers, and that such allocation is a "hotly contested issue" before FERC.

NorthWestern Energy, the Butte-based utility that serves more than 300,000 electric customers in Montana, is proposing a 430-mile, 1,500-megawatt power line from Townsend into Idaho, known as the Mountain States Transmission Intertie.

The company says the line is for exporting Montana-generated renewable power, such as wind power, to urban markets on the West Coast and in the Southwest. The costs of building the $1 billion line will be borne by developers using it to transport their power, NorthWestern has said.

Company spokeswoman Claudia Rapkoch said Tuesday that FERC indicated in a ruling last summer that it supports NorthWestern's intent to charge the costs of the line to developers and not Montana business and residential customers.

And even if FERC ruled that ratepayers should bear part of the costs, "nothing gets put into rates unless the PSC approves it at the local level," she said.

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However, commissioners said Tuesday they're concerned about FERC potentially "usurping" the power of the state commission to set rates related to the power line.

A study by consultant Energy Strategies, released earlier this month, said the MSTI project should "have no direct impact on electrical rates for Montana ratepayers."

"Those transmission customers who ultimately use and pay for MSTI would most likely be comprised of Montana generators that wish to export power and agents for out-of-state users that wish to purchase that power," the report said.

The report is part of an environmental impact statement being prepared on the power line.

The report also said NorthWestern electric customers in Montana could see "secondary impacts" on their rates from MSTI, such as "upward pressure" if Montana power generators become able to sell their power to higher-priced markets outside the state.

It's difficult to predict these impacts precisely, the report said, but the power line also could lead to "downward pressure" on rates paid by Montana customers, because MSTI would encourage more development of power projects and thus more competition.

Commissioner Brad Molnar, R-Laurel, who has warned that MSTI will lead to higher rates for Montana consumers because it will force them to compete against higher-priced markets in the Southwest, said he wasn't impressed by the report.

The authors didn't appear to do an independent analysis or contact other sources besides NorthWestern, and "just took some pretty general stuff off the Internet," he said.

Missoulian State Bureau reporter Mike Dennison can be reached at 1-800-525-4920 or at mike.dennison@lee.net.

 

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