Montana’s Clean Energy Future Should Not Be Financed on the Backs of Ratepayers

Commissioner Tony O’Donnell, Montana Public Service Commission

7-25-17
Imagine that you were forced to sign a 25 year contract for gas for your car at 3-4 times the market price.  That’s the exact situation NorthWestern Energy customers were facing without the Commission’s recent action to reduce the contract length and rate available to small renewable projects known as Qualifying Facilities (QFs).

As usual with actions that put ratepayers first, those who would have us promote renewables at any cost are hopping mad.

The Federal law that the Commission must follow, PURPA, clearly states that ratepayers shouldn’t pay more for one form of energy over another. That law also requires “long-term” contracts for renewable energy projects without providing a precise definition of “long-term.”

Until recently, contracts were set at a term of 25 years; however, the Commission received compelling testimony from the state consumer advocate, the Montana Consumer Counsel that fixed price, 25-year contracts were “excessively risky for customers.” My colleagues and I on the Commission agreed and earlier this month we voted to reduce contracts to a maximum of ten years.

The price that NorthWestern must pay for the power supplied by renewables is ultimately born by the consumer. The PSC’s charge is to ensure that customers, you and I, pay no more for alternative energy than we otherwise would for power generated by the utility or purchased from the open market. The longer the length of the contract the less accurate these calculations become, and the greater the likelihood that consumers will wind up paying too much.

Case in point, last June the Commission blocked a proposal by a handful of developers to build 130 megawatts of new solar generating capacity at a highly inflated rate of $66 per megawatt hour, roughly 3 times the market price today. That action is projected to save ratepayers an estimated $65 million over the next 25 years based on a forecast of current market prices. 

Shorter contracts provide a benefit to both consumers and QFs by ensuring that rates paid to developers more accurately reflect the actual cost of generating electricity.

Recently circulated stories have strongly suggested that the Commission’s actions were mean to “kill” wind and solar development in the state. There is no truth whatsoever to this claim. In fact, the Commission recognizes that the risk associated with locking customers into long-term rates is universal and that’s why we voted to apply the exact same treatment to NorthWestern, as well as QFs.

To be sure, renewable development brings jobs and dollars to the local economy, but such concerns are outside the scope of the Commission’s mandate to select the least cost resource to reliably serve customers. Federal law clearly prohibits the Commission from favoring one form of generation over any other. Such incentives are the sole privilege of the Montana Legislature or Congress.

In the coming weeks the Commission will undoubtedly face motions to reconsider our decision.  I will approach those requests with an open mind and will happily reverse my decision if presented with compelling new information, but any proposal must square with the legal requirement that rates remain neutral for customers.  Montana’s clean energy future must not be financed on the backs of ratepayers.

Let’s raise the level of campaign discourse

Oct 27. 2016

I have to admit that this has been a most unusual campaign.  There has been almost no discussion by my opponents on issues of substance.  Nor have they challenged of any of my positions or votes while serving on the PSC – something I would have welcomed talking about.

Instead, I have one opponent (Ms. Cooper) who insults my integrity, saying I have a “cozy” relationship with NorthWestern Energy, because I apparently accepted a small, fully reported donation from their employee PAC 12 years ago as a candidate for legislature.  Cooper claims to be the only honest candidate in the race, because she refuses PAC donations.  Yet when the Montana Conservation Voters PAC gave her a sizable in-kind donation in the form of a professional campaign school (valued at $225 over the minimal registration fee), she showed no intention of reporting it.  Indeed, when MCV did the right thing, informing her that it was an in-kind PAC donation, Cooper went ballistic, filing a complaint against MCV with the Commissioner of Political Practices.  This “honest” candidate clearly wanted to completely hide the donation from public disclosure.

Then there is Rep. Noonan, whose main charge against me is that I am (in his words) “a dangerous deregulator.”  He’s not specific, so I have no idea what he’s talking about, because the Public Service Commission has no authority to deregulate anything.  The deregulation of Montana Power was done by the legislature, and I opposed it at the time.  If he’s referring to my commission votes allowing competition in passenger service (UBER) and approving consumer choice in garbage collection where monopoly now exists, I’m guilty as charged!  But I hardly consider that dangerous.  Apparently Pat does, since he voted against the popular UBER bill in the House.

For those who are confused by all of this, let me offer a straightforward description of my first term on the PSC.  In every way and at every opportunity, I stood for the consumers of this state.  I approached my work as a firm and fair regulator, always keeping the rate-payers’ interests forefront in my mind.  On many key issues and key votes, I provided bold leadershjp in defense of the consumer, opposing sizeable rate hikes that previous commissions would have passively approved.     

The PSC has been doing a very good job, resulting in residential electricity rates that in real, inflation-adjusted terms, have risen just 2.6% for NWE in the past four years, and declined 2% for MDU.  (Ms. Cooper’s assertion that rates have increased 15% is pure, politically-driven rubbish.)  Meanwhile, gas rates have declined for those utilities during that period, 21% and 17% respectively. Yet there is much work left to be done, as we face both the challenges and the exciting opportunities that lie before us.  Utility regulation needs a major overhaul, with more incentive-based, risk-sharing approaches replacing the old paradigm of passing through to the customer every risk, cost and operational mistake.       

As we face these critical issues that so greatly impact our families, our communities and our economy, I would be deeply honored to serve you for another four years on the PSC.

Roger Koopman

Public Service Commissioner, District 3

Congressman Zinke Is Leaving Men Behind

A 56 Day Water Park - or - A Smarter Way

Editor's Note: To comment click on article title

Opinion
By Edward Banderob

"Wise Holistic Cost and Climatically Appropriate Utilization of Community Recreational Capital"

Facts - Climatic:
The climatic conditions in Butte are significantly different than where any other outside aquatics facility is located in Montana. In the last 20 years Butte has had an average of 2.6 days with day time high temperatures over 90 degrees, 22 days with night time low temperatures above 50 degrees, and a brisk wind most afternoons after 4:00 PM in the summer time.

Facts  - Outdoor Aquatics Usage;
The previous pool was open for the summer period, but only used an average of 56 days a year because it had to closed on inclement weather days due to the threat of lightning.

Facts - The YMCA has invested millions of dollars in its aquatic facility.  The Y is experienced in operating an aquatic facility, and has an experienced life-guard and teaching staff.  The Y has over 1,000 children a year participate in their aquatics programs.  the Y is open to Partnering with the City-County on an outdoor pool.

Yes we can all agree that our community needs a summer time family friendly aquatics feature at StoddenPark for the smaller children and tweenagers, but lets be realistic.

But; Isn't there a "Smarter Way"? Isn't there a Wiser Holistic More Cost and Climatically Appropriate Way to Spend the Limited Community Recreational Capital"  then to dump it all into a 56 day (70 less closures for lightning threats) usage Water Park? When we were told that the older teenagers are not going to use it anyway. Where will we get the Recreational Capital to develop the kind of Youth Recreational Facility at the MT Con that the older teens and maybe even the college students would use?

Wouldn’t it be smarter to spend $2M or $3M on a Family Friendly Glorified Splash Pad with a couple Water Slides ending in Splash/Plunge Pools?  That could be enclosed, with Plexiglas sides and a retractable roof, and be less costly to operate?

Wouldn’t it be smarter to spend $2M or $3M to create a year around Water-Snow-Ice Park at the Mt Con? With more extreme  water-snow-ice slides and dirt/snow terrain features at the MT Con that would be an attraction for older teens and maybe even some of the sports enthusiast at MTech.

Wouldn’t it be smarter to enter into a Public-Private Project at the YMCA to build a Gym or an Outdoor Pool for $3M to $4M of taxpayer monies matched by $3 or $4M Private Monies?

A NO on a $7.2M Bond, $8.7M Public Monies plus $350K a year 56 Day Water Park would be a YES for "A Smarter Way" usage of our limited Community Recreational Capital. That would really give our community something unique that people from out of town that already have their own water parks might want to come to.

What do you think? Write your letters. Post your opinion on this site, and on your own Facebook page.