Montana lawmakers accused the state’s utility regulator Thursday of abandoning consumers in its handling of NorthWestern Energy’s application to buy more of Colstrip Power Plant.
Legislators grilled Public Service Commission Chairman Brad Johnson about the PSC’s recent flip-flop on whether NorthWestern Energy had adequately disclosed the consumer risks associated with the utility’s application for preapproval to buy more of Colstrip Unit 4. Legislators accused Johnson of meeting illegally with parties in the case, which he denied.
“It’s a really significant public trust issue when it appears that the PSC flips on a dime and is not really doing their due diligence and holding — requiring — utilities, or whomever, to submit the appropriate documentation,” said Sen. Mary McNally, D-Billings. “Everyone knows preapproval pretty much shifts the risks onto consumers. So, this is a big deal. It’s going to continue to be a big deal. The history on this, in terms of the PSC in the last couple years, has been lousy, to put it politely.”
The questions came during a livestreamed Thursday meeting of the Legislature's Energy and Telecommunications Interim Committee.
At issue were several weeks this spring when Johnson and three other members of the all-Republican commission reversed themselves on whether NorthWestern’s application lacked information necessary to determine exactly how much the extra 12.5% of Colstrip would cost the utility’s 379,000 Montana customers. Power plant co-owner Puget Sound Energy is selling its 25% share of Unit 4. NorthWestern intended to buy all of Puget's share, but Talen Energy, another power plant owner, has since spoken for half.
First, the commission “conservatively” estimated March 23 that the 25% share for sale — promoted by NorthWestern as a $1 steal from a power plant co-owner in a bind — would eventually cost Montanans as much as $100 million. There were significant issues missing from NorthWestern's application, the PSC ruled. There was no talk, for example, about how much longer Unit 4 might actually run, a concern given that four of the Unit’s five owners face deadlines to stop selling coal power in Washington and Oregon. The first deadline, Washington's, is in 2025.
Consumers are still paying down a $407 million debt at roughly 8.25% for NorthWestern’s current 30% share of Unit 4 and are scheduled to do so through 2042, a date that in 2008 lined up with the other power plant owners’ expected life of the plant. The commission wanted to know more about how the 2008 purchase would be affected by the new share NorthWestern is pursuing.
By late April, the PSC flipped its decision. NorthWestern had provided none of the information the PSC requested, but the previously concerned commissioners were now saying the application was adequate. Some said they looked forward to approving the deal. And, they also agreed to wrap up their work by year’s end, as NorthWestern requested in responding to the commission’s March 23 ruling that the application was deficient.
“Can you explain to me what went on between those two periods of time and how the PSC changed its mind as a group?” Rep. Denise Hayman, D-Bozeman, said to Johnson. “I would like to know who you talked to during that period.”
Johnson’s explanation was that the commission had become concerned about NorthWestern Energy not having enough dispatchable electricity in the future. The utility has long foreshadowed a future energy crisis brought about by the retirement of coal-fired power plants and a regional pivot by other utilities to renewable energy. NorthWestern has argued that buying more of Colstrip is a way to secure generation capacity that can be brought online whenever needed. Colstrip’s other utility owners have argued the exact opposite as they turn to replacement power from other sources, including Montana hydropower, and Montana wind farms now under construction.
“The majority of us on the commission believe that there is a real potential going forward of a capacity shortfall, if you see the continued trend of retirement of baseload generation. So that was central to our thought process,” Johnson said.
The majority of the commission reasoned that even though NorthWestern declined to add details to its application as asked, the PSC could still request the information later, he said.
“In terms of discussions, I had virtually no discussions with anyone from NorthWestern. I did have, and I can’t give you specifics on who or when, I did have discussions with staff and other commissioners,” Johnson said.
Hayman wasn’t buying it. She produced records from the City of Colstrip, a party to NorthWestern’s purchase case, in which the city stated that Public Service Commissioners spoke multiple times to Colstrip Mayor John Williams about NorthWestern. The PSC is a quasi-judicial body and interacting with parties during an active case before the commission is akin to a district judge chatting with a plaintiff about a case before making a ruling.
“Would you explain the law to me that allows you to talk to an entity that’s a governmental group that’s an intervenor on an active case in front of the PSC? As far as I know, that is illegal,” Hayman said.
Johnson replied. “I don’t believe there was any discussion of the elements of the docket.” He described his interactions with the Colstrip mayor as “a couple conversations ... not a lengthy or detailed conversation in any way,” which didn’t involve the details of the proposed Colstrip Power Plant buy.
Colstrip records framed conversations with the PSC differently.
“We have from a City Council meeting from Colstrip that ‘Mayor Williams had several conversations with the Public Service Commission members regarding the filing by NorthWestern Energy,’” Hayman said.
The Energy and Telecommunications Interim Committee Chairman Rep. Derek Skees, a Kalispell Republican from Polson, told Hayman to wrap it up. There were more Democratic lawmakers with questions about the PSC’s reversal. Republicans on the committee had none.
Rep. Chris Pope also wasn’t buying Johnson’s “capacity” explanation, calling it a couple years old and irrelevant when weighing the risks the Colstrip application presents to consumers.
“There are substantial issues of, coal prices, basic information that would dictate to those, both the PSC, but also others who are watching this very carefully to determine whether or not this is a reasonable deal for ratepayers. It has nothing to do with the capacity factor,” Pope said. “This has to do with protecting ratepayers from future expenses, which have not been identified. And all of a sudden, I mean within a nanosecond, the PSC turns around and not only reverses against the staff’s recommendations, but has now done it twice in a row.”
McNally said she would formally ask for all records that might explain the PSC’s reversal. Legislators have the ability to demand information from government agencies. She invited other legislators to join her in doing so.
There was a considerable amount of Colstrip primary election politics playing out in the background. Two of the Billings Republicans on ETIC are also in political races where the power plant is an issue.
Rep. Daniel Zolnikov is challenging Public Service Commissioner Tony O’Donnell in a three-way primary, which also includes Republican Kirk Bushman. Zolnikov stayed out of questioning about the PSC’s handling of NorthWestern’s Colstrip application.
Billings Sen. Tom Richmond’s re-election bid is being challenged by Brad Molnar, a former Public Service Commissioner and legislator who has attacked Richmond for carrying a NorthWestern bill in the 2019 Legislature that would have approved the utility’s Colstrip buy without the PSC determining whether the purchase was in consumers' best interest. In that case Johnson told the legislator the PSC was ready to step aside and let the Legislature approve the deal.
Richmond didn’t ask any questions regarding the PSC’s about-face on the Colstrip application, either.
Johnson also faces a crowded, six-way primary, as he attempts to win back the Montana secretary of state’s office he lost to a Democrat 12 years ago.
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