‘Green’ power fuels rate increase fears

A power transmission project proposed by NorthWestern Energy could double what Montanans pay for power, members of Montana’s Public Service Commission say.

The governor’s office says that’s possible, but not likely.

The project would entail the construction of five collector lines that would reach into wind-rich north central Montana. They would carry power to a large export line that would begin at a substation near Townsend and end at Idaho Power’s Midpoint substation, making Montana’s growing capacity to generate wind power available to the large and environmentally sensitive California market. The commissioners fear, however, that more than just new wind power generation would flow to California once current contracts expire.

Power customers in the Golden State now pay roughly twice what ratepayers living under the Big Sky do, according to Commissioner Brad Molnar, and the plan entails an upgrade to the lines that run back to Colstrip, the site of a cluster of massive coal-burning generators.

“It has the capacity to drain all of the native generation, and we would be forced to buy it back,” Mr. Molnar said. “We would have to bid for every spark produced in Montana against California. If it happens, it will double what we have to bid.” The project that has drawn the commissioner’s skeptical gaze is called the Mountain States Transmission Intertie, or MSTI.

Competition with richer markets is “potentially a problem with almost any additional transmission for Montana,” PSC Chairman Greg Jergeson said.

He noted that as Montana’s primary provider of electricity, NorthWestern still has to purchase most of the power that it gets from the market. “I have warned legislative committees that pound the table saying we need to create new transmission that this is something they have to take into account,” he said.

The chairman explained that this was why the commission supported House Bill 25, which was passed in 2007. It has enabled NorthWestern to start to build its own generation.

“The only way to reserve Montana power for Montana ratepayers is to have the generator be a regulated producer in Montana,” he said.
HB 25 has already borne fruit. The PSC recently voted to issue an order approving NWE’s request to build and operate a gas-fired power plant near Anaconda at Mill Creek, a PSC press release said.

Commissioner Ken Toole hails from the western side of the state, while Commissioner Molnar represents ratepayers in the east, and the two rarely agree, yet on MSTI’s rate impact their views converge.

“It does happen,” Mr. Toole said.

Mr. Toole said in an e-mail that he shared Mr. Jergeson and Mr. Molnar’s concern that the MSTI project could put Montana ratepayers in direct competition with California customers. He noted that MSTI could have the same ramifications as initial deregulation.

“We ended up competing with the California market here,” and it could happen again, he said, “if we build lines that suck all the generation from Montana.”

NorthWestern Energy’s spokesman Claudia Rapkoch offered another perspective.

“We are obviously very concerned with our Montana customer base,” she said. “We just don’t share the concern that this particular project will put them at risk.”

She said she didn’t think that NWE’s new transmission projects would have the same impact that observers thought they would five or six years ago. She noted that the recession had dampened the demand for energy nationwide. In addition, supply has been going up as wind power generation projects come online around the country. She said that waxing supply and waning demand would soften the impact of the California market on Montana energy prices.

Most significantly, she explained, NWE could now own its own generation. As a regulated utility, its generation would be shielded to a degree from market forces. She noted that NorthWestern already had a stake in Colstrip 4’s coal-fired generation and that its Mill Creek natural gas facility would provide regulated power to supplement wind generation.

The utility played two roles, Ms. Rapkoch said, one as a Montana utility and another as a regional transmission system. In addition to its obligations to its Montana customers, NWE also had to fulfill the expectation of a broader community, the great Northwest and the nation.
“We can’t just cinch Montana off,” she said.

Montana has always exported power. The state generates roughly twice what it uses. For this great resource to be all it can be, there has to be a way to get it to market, Ms. Rapkoch said. Comparing locally generated electricity to another commodity, she noted that Montana grain isn’t stopped at the border in order to keep the price low.

She added that as much as 5,000 megawatts of new renewable energy generation was just on the horizon in northern and central Montana, and she equated that development with prosperity.

She said that some “landowners and ranchers were able to stay on their land because of wind revenue,” and she explained that the ancillary services that were needed to sustain energy generation and transmission created new and lasting jobs in Montana.

The governor’s office supported new transmission lines as well.
“This is an old issue,” said Evan Barrett, commenting for the governor’s office. He noted that Montana already exported power to people who pay more. He said that he knew that the concern was “that power lines would suck all of the cheap power out of Montana,” but he argued that the export market wasn’t interested in Montana’s cheap coal-generated electricity.

“It’s not just a price issue,” he said. “It’s a question of greener energy.” He said that the Schweitzer administration kept in close touch with power officials in California, and they believed that the state was looking at mandating that 30 percent of its power come from renewable sources by 2020.
“The only thing that’s going to be moving on those lines is green power,” Mr. Barrett said.

Wind generation is erratic, however, and requires other sources of generation to keep a steady flow of electricity on the lines. Quite often that generation comes from burning natural gas, a process that is not “green.”

Commissioner Toole pointed to the possibility that MSTI could facilitate “greenwashing,” the practice of giving a project the mere veneer of being environmentally sound. “Everybody talks about a new project to develop wind, but you can’t run just wind,” he said. “You can’t paint electrons green.”

Mr. Barrett admitted that new transmission projects could result in higher rates for Montanans, but he thought that it was unlikely. Although he compared legislation that allowed NWE to build its own regulated generation to the act of putting toothpaste back into the tube, he said that the administration would do everything in its power to make sure that Montana’s cheap coal-generated power would not be exported, “if it can be done legally.”

The governor’s spokesman reiterated that he believed that Montana consumers would be primarily protected by California’s green mandate. “The market at the other end is saying, ‘That cheap coal power that you’ve got there, we don’t want it.’ Colstrip power isn’t going to be shipped out of state,” he said.

Mr. Barrett said that the Schweitzer administration supported MSTI and other new Montana transmission projects because they were in tune with the administration’s three energy objectives: combating global warming, promoting energy independence and enhancing economic growth.

In the end MSTI’s fate probably won’t be in the hands of NorthWestern, the PSC or the governor. Montana’s Department of Environmental Quality has siting authority over the project, and the Federal Energy Regulatory Commission will decide whether to approve NorthWestern’s request, said Mr. Jergeson.

“The commission can participate, but the decision is made by some other agency,” he said.

Jim Larson

The Billings Outpost

5 June 2009

Tags: Wind power, Wind energy

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