It only took a few months to discern just how craven the latest version of the all-Republican Montana Public Service Commission would show itself to be. Faced with an absurd bill that would hand over more control of Colstrip 4 to Northwestern Energy and transfer all the risk—not to mention higher rates—to Montana power consumers, the Republican-controlled PSC voted 3-1 to cede authority to the energy giant and limit their own power to set rates.
Mike Dennison reports that only Commissioner Roger Koopman opposed the decision:
But Commissioner Roger Koopman, R-Bozeman, the sole vote against supporting the bill, said it sets a terrible precedent for undercutting the PSC’s authority to review utility costs, at the behest of a single utility that wants to buy power and pass on those related costs to ratepayers.
“If we believe in this bill, then we don’t believe in the PSC,” he said. “The Legislature might as well go to work creating something new to their liking, because this bill is a denial of what we are here to do.”
And when Roger Koopman is the strongest voice for regulation and consumers on the PSC, we’re all in real trouble.
The Montana Free Press has led the coverage of this absurd giveaway to NorthWestern, and notes that Montana ratepayers could each eat costs of over $700 to enrich Northwestern, which will effectively bear no risk in the deal that could net them $40 million:
First, SB 331 allows the utility to recover its current investment and cleanup costs at Colstrip, even if the coal-fired plant closes early. The legislation bars the PSC from interfering.
Second, SB 331 allows NorthWestern to buy an additional 150 megawatts at the plant for no more than $1. The utility would receive a return of up to $40 million from that new ownership without PSC oversight, regardless of when the plant closes.
NorthWestern would receive its returns through a guarantee that its Montana customers will pick up the tab.
As Koopman noted in his opposition to the bill, the PSC’s endorsement of it is an endorsement of doing away with its oversight of utilities in Montana. In a memo outlining the reasons the PSC should oppose the bill, the professional staff at the PSC argued that the bill undermines the entire premise of the regulatory structure in place to protect both utilities and their consumers:
Second, SB 331 makes possible a regulatory situation in which the appropriate coupling of risk to reward, and the fair allocation of that risk between the utility and its customers, is dismantled. In adding Colstrip 4 to its regulated rate base in 2008, NorthWestern was awarded a rate of return on the market-based “original cost” as a measure of the economic risk being assumed by the company. However, in guaranteeing security for NorthWestern’s Colstrip investment, SB 331 removes a potentially sizable portion of risk assigned to the utility and its stockholders and shift that risk entirely to ratepayers.
In terms that even PSC Commissioner Randy Pinocci can understand, what the PSC endorsed today is a bill that will let the very entity it exists to regulate operate outside their jurisdiction and put ratepayers at risk. And if we’ve learned anything over the past few decades in Montana, NorthWestern absolutely must be regulated.