OPINION: Why I-180 is unfair and unreasonable

Professor Steve Running recently penned an opinion piece in the Daily Inter Lake in which he asked readers to sign petitions to place proposed Initiative 180 on the ballot. He began with a lengthy discussion of something he knows a great deal about — climate change — and ended with a call to support I-180, something he clearly knows little about.

It was disappointing to see a respected voice on climate change advocate a rewrite of Montana law when the proposed rewrite is not only unreasonable, but would have a profound adverse impact on NorthWestern’s electric customers.

Initiative I-180 is a poorly conceived attempt to rewrite the 2005 Renewable Power Production and Rural Economic Development Act. That legislation, championed by then state Sen. Jon Tester, created the state’s renewable portfolio standard. It effectively applies to only two utilities in Montana: NorthWestern Energy and Montana-Dakota Utilities Co. It required them to have a generation resource portfolio with at least a 15 percent renewable energy component by 2015. Of critical importance, Sen. Tester’s legislation had a cost cap. If renewable energy developers demanded too high a price for their power, the two utilities did not have to buy it to meet the 15 percent statutory mandate.

NorthWestern Energy already relies on renewable resources to meet the majority of its customers’ energy needs. All told, NorthWestern owns, or has under contract, 237 megawatts of wind generation resources and 479 megawatts of hydroelectric generation resources, about two-thirds of its total generating capacity. With its dams, NorthWestern will meets its customers’ needs with an energy mix which is about 44 percent hydro, 13 percent wind, and 43 percent fossil fuel.

The authors of I-180 have a huge trick up their sleeve. Under the language of the proposed initiative, NorthWestern’s recently purchased 442 megawatts of hydroelectric generation cannot be counted towards meeting the proposed renewable mandate in the Initiative until NorthWestern achieves an 80 percent renewable energy portfolio.

For a generation resource to count as an eligible renewable resource under the 2005 act, it had to be constructed after Jan. 1, 2005. In their proposed rewrite of the act, the authors of I-180 left that provision intact so that NorthWestern’s recently acquired hydro facilities could not be counted in meeting the 50 percent renewable mandate for 2030.

Because 1-180 does not allow the use of the dams to meet the proposed standards until it has achieved an 80 percent renewable portfolio, NorthWestern would have to acquire significant additional power that it does not need to serve customers to meet a 2030 standard it currently exceeds. For example, I-180 would establish a 37 percent renewable standard for year 2024. To meet that standard in eight years, without counting its hydro facilities, NorthWestern would have to acquire the generating capacity of more than three Judith Gap wind farms, at a total cost in excess of $1 billion.

The proposed Initiative also repeals the cost cap which was an integral part of the 2005 legislation. Sen. Tester knew a cost cap was essential to protect MDU, NorthWestern and their customers. And, because I-180 only applies to about 65-percent of the electric customers in Montana, the burden would be even more unreasonable.

The supporters of I-180 will likely claim they have invented a new cost cap — a 2 percent limit on the rate increases that NorthWestern can seek. That isn’t a cost cap. That is a limit on cost recovery. The supporters of I-180 are unrealistically contending that the state can in one breath impose hundreds of millions of dollars in costs upon NorthWestern, and in the next breath refuse to allow it to recover those state-imposed costs in rates.

I-180 isn’t really about climate change. It is political theater. It is not only a bad idea, but a discredit to Montana.

John Alke is an attorney employed by NorthWestern Energy. He lives in Helena.