HB 597 Is Another Attempt to Protect NorthWestern at the Expense of Consumers
I admire Senator Duane Ankney in his persistence in attempting to obtain legislative assistance for the people of Colstrip. Senator Ankney appears to be sincere in his efforts to assist that community from economic dislocation, a concern I share and sympathize with. However, apart from a likely temporary reprieve, I fear Senator Ankney’s proposed amendments for the free conference committee on SB 597 will benefit NorthWestern and its shareholders more than anyone else including the Colstrip community. When SB 331 went down to defeat in the House (after what I perceive a misguided attempt by Republicans to hold Medicaid expansion hostage to this Bill by forcing Governor Bullock to choose between vetoing SB 331 and preserving Montana’s Medicaid Expansion), Senator Ankney indicated that he wouldn’t likely have voted for the House version of the Bill. Now, Senator Ankney is attempting to revive the problematic aspects of SB 331 through “amendments” to HB 597. I will leave aside for the moment my concerns about the public policy aspects of Senator Ankney’s amendments (it is an unwarranted effort to protect coal generation from inexorable market forces at the expense of cleaner and less expensive renewable generation among other concerns), instead I will focus on legality.
Just as was the case with SB 331, the Bill appears to delegate state authority to private actors, which is an unconstitutional delegation of authority. I mentioned this in a prior post, and given the required brevity of blog posts, I will not repeat that discussion here. However, just one example should illustrate the point. The new Section 5 proposed by Senator Ankney’s amendments state that the Montana PSC “shall allow recovery of costs incurred by an electric utility in acquiring and owning an increased ownership in an electric generating unit and a prudent investment in an interconnected transmission facility if an electric utility provides documentation to the [PSC] that the acquisition will increase the electric utility’s shared ownership in the easternmost segment of a 500-kiolvot transmission line to 50% or more of the line’s capacity.” This “documentation” is, essentially, a memorandum of understanding between private entities. This is unconstitutional delegation almost per se.
I have a lot of other legal concerns about these amendments, but I want to focus on what appears to be an attempt to induce support from Democrats with Senator Ankney’s new proposed Section 6 amendment. While it appears to be promoting a carbon neutral policy in Montana, it does not actually require Montana utilities to do anything. According to NorthWestern’s last IRP, its portfolio is 61% percent carbon free right now. Montana is prospectively going to be 75% carbon free as of 2030 without any additional changes due to anticipated additions of renewables, plant retirements or other factors. In other words, NorthWestern will already meet the requirements of being carbon neutral as of today without doing anything else. Also, the proposed amendments do not actually mandate a reduction in carbon. You could meet the requirements in the amendments with 70 percent renewables and 30 percent gas, or 80 percent renewables and 20 percent coal. In the latter case, you would actually have an increase in carbon emissions all the while being compliant with the proposed new law. And up to 20 percent of the requirement can be met by renewable energy credits or other non-actual reductions, which means that you would only need to have 80 percent renewables and still keep the coal plants operating in at least some fashion to fill 20 percent of the portfolio in the future.
As I noted in my prior blog post, the shareholders of NorthWestern will benefit from this bill as their potential exposure to cleanup costs will be reduced and they will earn a return on the new acquisitions. Ratepayers rather ratepayers will be exposed for 10 years of cleanup costs (up to $75 million total) with very little oversight and no way to claw back that money if it proves a wildly imprudent decision. The people of Colstrip may benefit for a brief time, but the economic forces in the nation are unlikely to support coal generated power much past the next few years -- although this bill makes a valiant, if misguided and ultimately unlikely to succeed effort to make sure coal generation is made viable beyond its normal expected economic life. While I appreciate Senator Ankney’s efforts to support Colstrip, this is simply a terrible set of amendments, of dubious legality, which shift burdens from NorthWestern to its customers with little oversight, and all the while making our planet a dirtier, hotter, and less healthy place.