Montana Reviews Controversial Coal-Saving Bill, Passes Community Transition Actions

 

 

By Iulia Gheorghiu

April 10, 2019 - The Montana state House and Senate submitted to Governor Steve Bullock on Friday the final copy of three coal-related bills passed earlier last week, earning a mix of cheers and jeers from environmental advocates supporting an energy transition away from the fossil fuel.

State legislators are considering a variety of policies to support communities through the anticipated retirement of Colstrip Power Plant's Units 1 and 2 in 2022 and the potential expedited retirement of Units 3 and 4, which are slated to close in 2035. The three bills have a big range in their scopes, from targeting local governments to Colstrip's owners, such as the investor-owned utility NorthWestern Energy.

Amid other legislative action, the House Energy, Technology and Federal Relations committee held a hearing on Monday for a controversial bill dubbed "Save Colstrip," approved by the Senate March 29. The bill, SB 331, would allow NorthWestern to buy more of Colstrip with reduced regulatory oversight.

As coal becomes increasingly uneconomic compared to natural gas and renewable resources, environmental advocates continue to argue that offering lifelines to coal plants is against the long-term interest of ratepayers and communities.

"There are a wide variety of coal bills from a wide variety of perspectives on the future of the coal industry," Anne Hedges, deputy director of the conservation group Montana Environmental Information Center (MEIC), told Utility Dive via email. "Some seek to soften the blow and help communities with the inevitable transition in energy markets. Others do everything possible to keep this massive plant operating regardless of the impacts on the rates of 370,000 Montanan’s that are captive customers of our largest monopoly utility."

Hedges referred to NorthWestern Energy, the largest investor-owned utility in Montana that serves over 70% of the residents, and Colstrip.

"Those who claim to most love the free market seem to be leading the charge to force Montanans to artificially prop up an uneconomic coal plant. It's just nutty," she said.

"Planned retirements in the near future of coal and other energy plants in the West mean continued reliance on purchasing electricity from the market to meet high energy demand, putting [sic] our Montana customers at risk," Jo Dee Black, NorthWestern spokesperson, wrote Utility Dive.

The risk includes high electricity prices, such as the ones seen in February, she said. "We need more owned energy generation in the portfolio to serve our Montana customers."

Among the three bills sent to Gov. Bullock's desk last week, are two Senate bills endorsed by conservationists and one more controversial House bill.

Environmentalist-Endorsed

SB 264, sponsored by state Sen. Jason Small, R, would revise laws related to coal-fired generation remediation activities, which would apply to Colstrip's owners. The bill would set a prevailing wage for the plant site through the end of generation activities, according to Small. SB 264 had passed the Senate 42-8 in February and the House approved it 66-32 on Wednesday.

"This is an attempt to help the families in the area," he told Utility Dive via email.

SB 191, sponsored by state Sen. Duane Ankney, R, would allow counties to establish a coal trust fund for future revenue losses, to address "the need for communities to be able to prepare for reductions in coal mining and coal-fired electric generation." Both chambers of the legislature largely supported this bill, with Senate voting for the final version 47-0 in February and House voting 96-3 last Wednesday.

"The problem in Montana is that local governments are not allowed to set money aside for a rainy day. If ever there was a good reason to put money aside," it's to prepare for a transition from coal, Hedges told Utility Dive on the phone.

Controversy Over Coal Financing

HB 476, sponsored by state Rep. Jim Keane, D, would provide low-interest loans for coal-fired generation. The state Senate passed the bill with a 34-15 vote last Wednesday, having passed the House 71-28 in February. The bill would allow NorthWestern to borrow $50 million from the Montana Board of Investments to buy more of the Colstrip plant, switch suppliers and operate the plant, according to MEIC.

The utility is not currently eligible for these state loans, which are capped at $10 million.

The bill "provides options for Montana to secure its energy future," according to Black.

"We think it's inappropriate for the private sector to get financing for that kind of activity," Hedges told Utility Dive on the phone.

Ankney also introduced with Sen. Tom Richmond, R, a bill that MEIC and other conservation advocates oppose: SB 331, dubbed by Montana Public Radio and other local news outlets as "Save Colstrip."

SB 331 would allow NorthWestern to bypass state regulatory oversight "to buy more of Colstrip and get $75 million in costs plus profits automatically reimbursed for customers," according to MEIC.

SB 331 could see a House floor vote in the next couple of weeks, according to Caleb Heeringa, deputy press secretary at Sierra Club's Beyond Coal campaign. The Montana Public Service Commission voted 2-1 to oppose SB 331 on Monday, reversing an earlier decision to support the bill.

The bill would create the framework for NorthWestern to add a 150 MW share of Colstrip Unit 4, according to Black. "Extensive research" shows this addition would be "the most cost effective way" to increase the utility's energy portfolio.

NorthWestern currently owns 222 MW of the 778-MW unit.

The bill "puts customers on the hook for future operation, maintenance, remediation and decommissioning of the additional share," MEIC wrote in its summary, opposing the bill.

"We are committed to affordable rates for our Montana customers," Black said.

The bill follows an earlier attempt also introduced by Richmond, SB 276, to save Colstrip, which was killed in the Senate Finance and Claims Committee on March 13.

The bill also sought to increase NorthWestern's ownership stake of Colstrip by buying up to 150 MW more if the bill were to pass, NorthWestern CEO Bob Rowe wrote in an opinion in March.

Other Western states are addressing potential lifelines for coal plants expected to close.

Wyoming Gov. Mark Gordon, R, signed a bill in March that would direct utilities to find new buyers for coal plants before retiring them. In addition, New Mexico Gov. Michelle Lujan Grisham, D, signed a bill into law on March 22 that would allow the investor-owned utility Public Service of New Mexico to recover stranded costs in the 847 MW San Juan Plant, slated to come offline in 2022.