Legislation currently being debated in Helena has a feel-good story to it — keep the Colstrip power plant open and save jobs. In actuality, Senate Bill 278 is a classic bait-and-switch that may not save any jobs, but it will put customers on the hook for millions and perhaps hundreds of millions of dollars.
The bill, sponsored by Sen. Tom Richmond, guarantees NorthWestern Energy that it will be allowed to pass through to customers any and all costs associated with its current 30 percent ownership of Colstrip Unit 4, regardless of how high its costs are or the size of the cleanup liability.
If NorthWestern decides to invest $200 million to keep the plant running, customers will have to pay NorthWestern $200 million, even if the plant shuts down the following year. And to make sure Montana customers get stuck with the bill, SB 278 exempts the deal from regulation by the Montana Public Service Commission.
Simply put, this bill has NorthWestern customers writing a blank check to the utility that ensures our electric rates will be the highest in the Northwest for decades to come.
This is not how regulation is supposed to work. As a regulated utility, NorthWestern gets the opportunity to earn a rate of return. In exchange, NorthWestern bears the risk if capital investments it makes go bad. If that risk is removed and shifted to customers, which is what SB 278 would do, NorthWestern will be under no obligation nor will it even have an incentive to act prudently.
The bill attempts to disguise this end-run around regulation by including a provision that makes it appear NorthWestern will take a larger ownership share of Colstrip and keep the plant running long into the future. That provision would allow NorthWestern to purchase an increased share of Colstrip from an unknown seller for $1.
But, who is going to sell their share in Colstrip for $1? The bill doesn’t say. It doesn’t even require that the deal must happen. The only guarantee in the bill is that NorthWestern customers will be on the hook for millions upon millions of dollars to keep this inefficient and expensive asset operating no matter how much it costs customers.
Normally, the Public Service Commission would be there to ensure that customers aren’t fleeced. But SB 278 removes the PSC from the equation for Colstrip costs. Removing regulatory protections for customers will not save Colstrip. Furthermore, if acquiring a larger ownership share of the plant is a good deal for customers, NorthWestern won’t need this bill because regulators will approve it.
SB 278 trades your money for an empty promise. Not only is this imprudent and unfair to customers, it does not help Montana get the most out of the tidal wave of clean energy investments that are coming to Montana and the West.
Diego Rivas is a senior policy associate with the NW Energy Coalition, an alliance of more than 100 environmental, civic, and human service organizations, utilities and businesses in Montana, Idaho, Washington, Oregon and British Columbia.