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Bozeman Daily Chronicle
January 27, 2014

Guest column: The customer is always right

Montana has probably generated more electricity than we consume for nearly a century, ever since some of the state’s first hydroelectric dams were completed. Our excess electric generation is exported to neighboring states by wire, bolstering our economy and our standing as an energy state.


Today we export about half of all of the electricity we generate, some from wind farms, some from hydroelectric dams, but most from the Corette and Colstrip coal plants.


A large portion of the electricity produced from these coal plants is transmitted to Washington and Oregon. While the economic activity generated by these electrical exports might not be among our top industries, it is an important part of our diversified economy that keeps Montana’s economy stable and our unemployment rate low. The problem for policymakers, and anyone who cares about our economic health is that this coal electricity export market is dying fast.


No clearer alarm for this inevitability could have been sounded than the recent revelation that NorthWestern Energy valued PPL Montana’s 682 megawatts of coal facilities at Corette and Colstrip at negative $340 million. Documents filed with the Public Service Commission regarding NorthWestern’s application to purchase 11 hydroelectric dams reveal that in its initial bid it was willing to pay $740 million. But if NorthWestern had to also acquire coal facilities as a package deal as PPL requested, it would reduce its offer by $340 million.


Though NorthWestern stated several reasons for placing a negative value on PPL’s coal generation, chief among them was concern that forthcoming regulations from the Environmental Protection Agency concerning greenhouse gas emissions could cause the facilities to become uneconomic.


NorthWestern is right to worry that new, and needed, carbon regulations could shutter the doors of old, inefficient coal plants, and should be commended for not taking risks with ratepayer money. But NorthWestern’s lack of interest in purchasing the facilities leaves open an interesting question: if the incumbent utility won’t take a chance on coal, who will?


Certainly not a utility on the West Coast, where Montana’s excess coal generation has historically been sold. A utility operating in any West Coast state could never get the purchase of these coal facilities past regulators. In fact policymakers there have signaled that they want out of the coal electricity they are already importing from Montana, citing risks to ratepayers and environmental concerns. Washington Gov. Jay Inslee (among others) has made it explicitly clear that he hopes to “end coal-by-wire,” a direct call to eliminate coal electricity imports from Montana.


Which leads us back around to the problem. If Montanans want to maintain an economically advantageous position as an exporter of electrical generation, we must develop products that our neighboring markets want to buy. Again, Washington Gov. Inslee recently said, “I’d rather we import wind or solar power produced anywhere in the West than to import coal power from anywhere else.”


If that sounds to you like an out-of-state governor trying to dictate Montana policy, it shouldn’t. That’s our customer speaking clearly about the products he wants to buy.


Montana has some of the best wind energy resources in the country. We can generate the kinds of electricity western markets want, creating good jobs at home by offering lower-cost renewable energy to neighboring states. But we can’t do it overnight; it will take time and effort to transition to becoming a major clean-energy provider.


We need to work cooperatively with our West Coast customers on new ways to coordinate grid operations to allow for greater renewable-energy utilization and more efficient transmission, efforts our customers are already addressing among themselves but without us at the table. We need greater focus on innovative ideas that can add value to our renewable resources, like advanced batteries and pumped storage projects. Above all, we need to accurately assess the evolving markets for electrical generation and take a proactive approach to making sure Montana remains relevant to the future of energy.

 

Jeff L. Fox is the Montana policy manager for Renewable Northwest Project, a nonprofit regional advocacy group promoting environmentally responsible renewable-energy resources.

 

http://www.bozemandailychronicle.com/opinions/guest_columnists/article_0db4e514-876e-11e3-b797-001a4bcf887a.html

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