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Power Prognosis

Northwestern Energy wants to build a 430-mile, 500-kilovolt transmission line from southwestern Montana to near Twin Falls, Idaho at a cost of around $1billion. The stated purpose of the line is to promote the production of clean power, mainly wind energy, in Montana by giving producers access to markets that need clean power. Montana already produces twice as much electricity as it consumes. Idaho and other western states are net electricity importers with large markets. Initial investment in new, clean power technology is very expensive. If investors are to develop more wind energy in Montana, we are going to have to build new transmission lines to get that power to markets outside Montana. The Montana-Alberta Tie Line (MATL),  a 230-kilovolt transmission line between Great Falls and Lethbridge, Alberta is another example of new development touted as a boon for wind energy.

In 1997, Montana had the sixth lowest electricity rate in the nation due to the dominance of the Montana Power Company. Then Montana Power asked for the deregulation of the power industry in Montana. Then Governor, Marc Racicot and the pro-development state legislature were only too happy to oblige. Deregulation led to Montana Power selling off all of it’s generating capacity, moving into an ill-fated telecomunications scheme and eventually filing for bankruptcy. Northwestern Energy bought the Montana Power transmission system and since then, electricity rates in Montana have seen a steady climb. Montana now has the highest energy rates among a dozen utilities in six neighboring states. Part of the reason that rates aren’t even higher in Montana is that most of the power that we consume internally is capitive within the state due to a lack of transmission facilities. Northwestern has no generating facilities of it’s own and must pay the going rate for power. More than half comes from PPL Montana, which bought many of the dams and coal plants once owned by Montana Power.

The Mountain States Transmission Intertie (MSTI), the line to Idaho, would alleviate some of the bottleneck and allow Northwestern to sell power outside of Montana at rates much higher than it can generate within the state. Now the rub(s); Northwestern wanted to be able to charge “negotiated rates” for power on the MSTI. Basically, negotiated rates amount to the company sitting down with power producers and coming to an agreement on how much they should pay to use the Northwestern line.This is good thing for Northwestern because the rates it could charge would not be directly tied to their cost to transmit the higher-priced power. Recently, FERC disagreed and ruled that they would have to charge rates based on the “cost of service” just as they do with their other transmission lines. Because Northwestern holds a virtual monoply on power transmission within the region, the negotiations would be heavily weighted toward the company. However, considering the MSTI as a part of the general Northwestern grid could lead to Montana consumers subsidizing the sale of electricity outside of Montana. Northwestern plans to go ahead with the line and argues that their ability to receive higher prices outside Montana could benefit in-state customers through price reductions or cheaper outside power.

Public Service Commissioner Brad Molnar isn’t buying it. He has vowed to stop the project altogether. According to Molnar, if Northwestern is able to get higher prices for Montana power from other states, Montana will wind up having to compete with those prices for Montana-produced power. Once the outside lines are in place, of course, there is no guarantee that they will be used to transmit wind-produced power alone. The MSTI could be used to drain cheap hydro and coal power produced in Montana to markets in California with Montana consumers subsidizing the power and Northwestern Energy reaping the heady profits. PPL Montana, which supplies about half of the power to Northwestern customers, supports the construction of the line. “David Hoffman, PPL Montana’s spokesman, said he won’t speculate on whether the new line could drive up the price that PPL can ask for its power in Montana“. Other PSC commissioners support the stance by Molnar. John Vincent, D-Gallatin Gateway says, “I want to make sure that Montanans don’t have to carry the burden of exporting that energy, for the profit of NorthWestern.

So, there you have it. If we are to develop alternative energy resources in Montana we need to have transmission lines to move that power to market. If we tie Montana electricity to lucrative west coast markets, we could have an almost endless demand for Montana clean energy. The conundrum is that if we tie into those higher-priced markets, Montana consumers become part of the market and have to compete with those higher prices for home-grown power. So, is the MSTI a one-way hose sucking electrons and money out of Montana, or does the money flow both ways? We already compete to sell most of our power in the regional markets, is Montana ready to jump in and play with the big boys? Are we serious about renewable power, or do we remain a coal colony? The answers aren’t easy, but then they never have been.

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3 Responses

  1. What about the potential jobs created from new construction and operation of wind farms or other generation projects? Doesn’t that add value to Montana?

    I was born in Montana and raised here and I am sick of hearing about “Montanan’s taking care of Montanan’s first”. Get in the real world you can no longer afford to be isolated from the rest of the world. Higher electricity prices are inevitable because the population of the world in general is increasing.

    What about the property tax revenues generated from generation facilities built in Montana? What about the licensing fees paid by companies operating in Montana?

    Apparently we are supposed to live in some artificial cocoon isolated from the rest of the world competing for food with the wolves.

  2. I kinda think that Montana needs to take care of Montanans first before we start carving up our landscape with transmission lines and wind projects.

    These larger projects typically require condemnations via eminent domain if the landower is able to stave off the attempts by these big power companies to obtain easements.

    That eminent domain is born out of Montana law – and I have to think that Montana law with regards to eminent domain is written for public uses by Montanans.

    Aside from any condemnation need or proceeding, if Montana is going to carve up its vistas for cleaner energy – and certainly, transmission lines are going to be a part of it – we gotta get more out of it than some tax dollars for the structures as they cross the land and some SRS and PILT payments when they cross public lands.

    There’s plenty of chest-puffing going on about the wind projects that Montana has – but as far as I know, that energy is going out of state.

    How absurd is that? Hundreds, if not thousands of miles of transmission lines passing over Montana, without a kilowatt going to Montanans?

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