Energy issues divide Montana lawmakers

Energy issues are heating up again in Montana, and the state’s power cooperatives will be paying close attention in the months to come.

The legislative Energy and Telecommunications Committee met at the end of last month to consider several measures, but Republicans and Democrats on the panel ended in a 4-4 draw over a long-term energy strategy.

Republicans on the committee were unhappy that last-minute changes to the legislation de-emphasized support for the state’s oil, gas and coal industries, instead favoring the development of alternative and renewable energy sources.

“They manipulated the process and took oil, coal and gas out of the plan,” said state Sen. Verdell Jackson, R-Kalispell, who sits on the committee.

Because fossil fuels lead the way in the state’s energy portfolio, they should play a major part in a long-range energy policy, Jackson said.

Another committee member, state Sen. Ron Erickson, D-Missoula, said his fellow Democrats “were quite willing to have language recognizing the importance of oil and gas in our future.” The Republicans, he added, wanted language calling for the state to support oil and gas development, mainly because those energy sectors have declined in recent years.

“We, number one, doubted whether that was true,” Erickson said, and secondly, a policy shaped for the future should not be tuned to conditions that existed in the past, prior to a recession.

Erickson personally did not support stronger language on oil and gas because of concerns that it would lead to tax breaks or subsidies for those industries when the state should be supporting “clean, efficient” new energy sources.

“I saw it in 1999, how a series of tax bills came in that gave great tax breaks to the oil industry,” Erickson said.

The draft bill, LC6000, originally contained language that would have put power cooperatives under the regulatory control of the Public Service Commission.

Among other things, the bill would give the commission oversight of meeting energy efficiency targets and energy efficiency assessments and to provide penalties for noncompliance.

On a 7-1 vote, the committee passed another bill that would require utilities to increase renewable energy sources to 20 percent of their portfolios by 2020 and 25 percent by 2025. That bill does not apply to cooperatives.

Jackson said he cast the lone dissenting vote because he believes the expanded alternative-energy requirements will lead to higher energy costs for consumers because alternative energy is more expensive.

Public Service Commissioner Brad Molnar said the original draft of LC6000 was a resurrection of House Bill 641, which died on a party-line vote in the 2009 Legislature. Regulation of co-ops, he said, essentially would amount to greater costs for co-ops and their members.

Noncompliance with any standards in the legislation would lead to costly lawsuits filed by environmental organizations with the commission, Molnar said.

“In my 5 1/2 years on the commission, we have not had a time when we have not avoided a cost suit before the commission,” he said. “They are constant, and they are wildly expensive.”

The goal behind the push for expanded regulatory control is to have the cooperatives support conservation programs that are run by environmental groups, who in turn donate to Democratic causes and candidates that support more of the same, said Molnar, the only Republican on the commission.

However, the co-op regulation language was stripped from LC6000 after the committee heard from cooperative representatives.

“We had a lot of great testimony from the co-ops,” Erickson said. “My position is that we ought not force them into that alternative energy requirement. The co-ops are so varied across the state that it would make little sense to force something on one that wouldn’t apply to another.”

“Coming under the PSC would be a big deal for the co-ops because we have local control and our boards are elected by the people they serve,” said Ken Sugden, general manager at Flathead Electric Cooperative.

“We have elected boards that we think do a fine job of regulating” the co-ops, added David Wheelihan, chief executive officer of the Montana Electric Cooperative Association.

The PSC currently regulates investor-owned utilities, such as NorthWestern Energy, to deter monopolistic business practices.

For his part, Democratic Gov. Brian Schweitzer contends that the state already has cleared the biggest hurdles regarding energy, and he thinks it’s paying off.

The state adopted its renewable energy portfolio standard several years ago, requiring utilities to source 10 percent of their power from renewable energy sources by 2010 and 15 percent by 2015.

That paved the way for wind power production to increase from 1 megawatt to 376 megawatts this year, Schweitzer said.

“And we have another 50 wind projects for a total of 4,000 megawatts that are in the pipeline right now,” Schweitzer said.

To follow up, the Clean and Green Energy initiative was passed to reduce property taxes on pipelines and transmission lines that move low-carbon energy, a particular incentive for increasing transmission capacity for wind energy.

“What I will say is that Montana has the best wind-energy resources in the country,” he said. “But right beside it we have over 30 percent of the coal resources in the country. And we are increasing our oil production.”

Schweitzer said the Legislature is now “rounding out the corners” for future energy policy.

“Policy makers should not choose the type of energy that will be the ultimate winner,” he said. “You set your standards and let energy compete with energy. But without exception, I want it to be designed in America and built by American workers.”

The Energy and Telecommunications Committee will resume discussions on energy issues at a Sept. 10 meeting, but the debates are likely to carry on into next year’s legislative session and beyond.

Even though the committee abandoned the cooperative regulatory issue, Molnar expects it will not go away once the session gets under way.

“There is an ongoing attempt to get the co-ops in under the PSC,” he said.

“Right now we have nothing [for a long-range energy policy], and I don’t know what will happen in the September meeting,” Erickson said. “Obviously this is not a topic that will go away once the session starts.”

Jackson said he’ll keep pushing for a long-range policy with a stronger emphasis on oil, gas and coal, but he’s not hopeful about positions changing on the committee.

“Our philosophy, as Republicans, is full-speed ahead on all sources of energy,” he said.

Reporter Jim Mann may be reached at 758-4407 or by e-mail at jmann@dailyinterlake.com.