Updated: Amended Colstrip bill heads to House

PSC staff: ‘significant concerns remain’

By: - April 9, 2021 5:31 am

Colstrip power plant in Colstrip, Montana (Photo by Larry Mayer/Getty Images).

A bill to encourage coal generation was sent to the Montana House on Thursday after earning 27-21 approval in the Senate on third reading.

“This is a bill to ensure the lights turn on when you want them on,” said Sen. Steve Fitzpatrick on the Senate floor earlier this week.

Sponsor Fitzpatrick, R-Great Falls, said Senate Bill 379 helps utilities purchase “dispatchable power,” energy they can use right away, as opposed to being forced to buy unpredictable wind and solar.

But the Public Service Commission’s legislative electric team and some lawmakers had argued the legislation could harm power customers by saddling them with liability for the aging coal-fired plant and impede the ability of commissioners to regulate rates. An April memorandum from PSC staff said if their assessment is accurate, “significant concerns remain” with the bill, although an amendment from Sen. Mike Cuffe, R-Eureka, lessened customers’ liability and took “a small step toward retaining regulatory oversight with the Commission.”

Prior to being amended, customers in Montana would have been on the hook for roughly $721 each if NorthWestern Energy closed Colstrip Unit 4 in 2027, according to a March memorandum from PSC staff. The memo said the bill left the risk of the company’s investment in the plant “entirely with ratepayers.”

However, PSC staff said the amendment from Cuffe meant the energy company would no longer be able to recover undepreciated book value for its existing share of Colstrip. However, it still would require full recovery of the book share, decommissioning and remediation costs related to any new shares acquired after the bill takes effect. That means the ratepayers could still be on the hook for those costs.

A deal Northwestern had recently proposed to acquire 185 megawatts from Puget Sound Energy could have cost approximately $100 a year per customer with the changes in SB379, the March memo estimated; “taken to the extreme,” all the remaining megawatts would equate to more than $700 a year for each customer.

In Montana, the Public Service Commission is charged with making sure a monopoly company, such as Northwestern Energy, gets adequate returns on its investments, and at the same time ensures customers pay fair rates.

The original bill raised serious concerns from the Public Service Commission staff because it would have hamstrung the five commissioners from setting rates that strike the right balance between the needs of the monopoly and those of the customer. Questions remain about the Commission’s ability to evaluate acquisitions, even with the amendment, said PSC staff in the April memo. 

In discussion on the Senate floor, Sen. Brad Molnar, himself a former member of the Public Service Commission, said Northwestern has repeatedly told shareholders that it plans to shut down the plant by 2030.

“The ratepayers will be paying until 2042 although they haven’t gotten a spark since 2030,” said Molnar, R-Laurel.

Sen. Duane Ankney, a Colstrip Republican, however, said the plants in his area have been putting out low cost, reliable energy for decades.

“And there’s absolutely nothing I’ve heard here that makes me believe they’ll do anything different,” Ankney said on the floor Tuesday.

On the Senate floor, the PSC staff memos were the subject of one amendment Fitzpatrick presented. He argued the memos should be confidential because they were being used by litigants in court proceedings, and they put commissioners in a bind if they took a vote that didn’t reflect the recommendation from staff.

“These memos are being weaponized in legal proceedings, which I think is unfair,” Fitzpatrick said. 

That amendment failed 25-25 on Tuesday, but some Senators pushed back against the idea that staff working for the state government would be outside Montana’s public right-to-know and right-to-examine records. 

Sen. Mary McNally, D-Billings, said if the bill had been law, no one would have seen the PSC staff’s analysis of SB379. Montana’s public participation laws make the memos accessible.

“I think it’s pretty clear that the staff assessment on the bill was not necessarily favorable,” McNally said. “So why would we not want the public to have access to that information?”

The bill squeaked through committee by one vote and earned approval on the floor this week with a 30-20 vote Tuesday and 27-21 vote Thursday on third reading.

This story has been corrected to reflect the bill was amended to address the $721 cost to ratepayers if the Colstrip plant is closed early.

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Keila Szpaller
Keila Szpaller

Keila Szpaller is deputy editor of the Daily Montanan and covers education. Before joining States Newsroom Montana, she served as city editor of the Missoulian, the largest news outlet in western Montana.