Colstrip Bill: Deregulation Is In The Eye Of The Beholder
From Montana Public Radio:
Travis Kavulla is a former vice chairman of the Montana Public Service Commission (PSC), and a sharp critic of the bill NorthWestern is lobbying for. He’s now the energy policy director at R-Street, a free market think-tank based in Washington, D.C.
“If a usually regulated utility gets to buy something, but without regulatory oversight, I’d guess I’d call that deregulation,” Kavulla says.
“The bill very plainly allows NorthWestern to charge consumers $75 million plus an unspecified amount of decommissioning and remediation costs. I’ve never seen in my experience any piece of legislation like this anywhere in the United States, which allows a monopoly from which consumers don’t have a choice in service, to essentially set rates for them that they have to pay.”
Critics, including Kavulla, point out that there’s nothing preventing NorthWestern from buying additional capacity at Colstrip now.
Company Vice President John Hines says the current situation at Colstrip, where one or more of the other investors in the plant might be willing to essentially give away generating capacity, requires different rules.
“Since NorthWestern isn’t investing anything, there’s really nothing to get a return on. But there obviously would still be these same risks. So we’re trying to balance the risks for NorthWestern shareholders and customers. On the other side of the ledger, people question whether we really need this power. I would argue that it is essential for the reliable operation of our system, and being able to keep the lights on during critical time periods.”
Former Montana PSC Chairman Travis Kavulla isn’t buying it. He says since Senate Bill 331 was introduced, he hasn’t heard a good reason as to why the policy is needed.
“They’ve never explained their answer anywhere; to Montana’s legislative committees, to members of the press or the public. And it’s a little disturbing that we are still dealing with a piece of legislation, the need for which is really unclear.”
Travis Kavulla says nothing prevents NorthWestern from buying additional power from coal fired plants now.
“They buy power all the time from the open market that doesn’t earn them a return, and we nevertheless expect them to buy that power to keep the lights on and to keep bills low. So, honestly, nothing about this really adds up to me.”
Again, Travis Kavulla.
“As to the idea that Colstrip might be saved by this transition, I disagree with the premise.
“I think it’s as likely as not that this move hastens of closure of Colstrip. So, I think we’re actually introducing quite a bit of risk into this. But it all comes back to the bottom line, that NorthWestern is a business and it should be expected to act like a business. You shouldn’t need to play this mother-may-I game with the Montana Legislature when Montana law already gives NorthWestern every authority and permission it would need to exercise this option that they’ve negotiated behind closed doors.”
