Montana Bill Could Hinder State’s Future Wind Investments

Posted by Betsy Lillian on March 27, 2017 No Comments
Categories : Policy Watch

A proposed Montana Senate bill could deter future investment in the state’s underused renewable energy resources, including wind power, according to the Sierra Club’s Montana chapter.

S.B.338, introduced by Sen. Duane Ankney, R-Colstrip, would force Puget Sound Energy and Talen Energy, co-owners of Colstrip Generation Station’s Units 1 and 2, to pay tens of millions of dollars to compensate for the impending closure of the coal-fired units, the environmental group says. In addition, the bill would force the utilities to pay for lost residential and commercial property values; all outstanding local bonds; all potential impacts to schools; and all lost revenues to the state, city and county.

Notably, the group points out that the companies would be offered no money for the site’s extensive cleanup costs, which have been estimated at almost $200 million for just these two units.

And importantly, the Sierra Club says, it could also hinder any future energy investment in Colstrip and the rest of Montana. PSE, which recently secured authority from the Washington State Legislature to set aside money for the Colstrip transition, is in the midst of a long-term planning process that will determine how it replaces its retiring coal facilities. A PSE representative testified during a March 16 committee hearing that this bill, indeed, could deter future long-term investments in Montana energy, including wind power.

“This is a dreadful precedent, and if I am any natural resource business – or even non-natural resource business – I would be fearful that this or punitive legislation to ‘pay to leave’ can be imposed on me,” states Tom Ebzery, an attorney representing PSE, as well as Avista and Portland General Electric, which make up 35% of the ownership of Units 3 and 4. “At the same time a punitive measure such as this bill moves through the legislature, we are hearing requests for the same companies to consider Montana for commitment to renewable resources. This is not the message you want to send these companies.”

Talen Energy has indicated during legislative hearings that it is losing $30 million a year and is asking for up to $10 million a year in low-interest loans from the state to keep operating Units 1 and 2 until the agreed-upon 2022 retirement date. Talen, which has yet to set aside any money for cleanup or transition, is also a 30% owner of Unit 3.

The Sierra Club says the bill has also drawn opposition from business groups in Montana, including the Montana Taxpayers Association and the Montana Chamber of Commerce, arguing that penalizing companies for making market-based economic decisions creates an anti-business environment in the state.

“It’s important that Colstrip residents are provided for as Montana responds to this generational shift in energy markets,” says Mike Scott, lead organizer for the Sierra Club in Montana. “But this bill looks backwards, not forwards. Nothing is more important to the future of Colstrip than taking advantage of its location on a major energy transmission corridor and providing the clean, renewable energy that West Coast consumers are demanding. Why would utilities ever make those kinds of decades-long investments when they know they’ll be penalized when market conditions change?”

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