Recent comments by Public Service Commission candidates Bill Gallagher and Travis Kavulla about the costs of clean energy are gravely misleading and need correction. In recent campaign ads and media stories around the state, Gallagher and Kavulla attack Montana’s renewable energy laws, saying that requirements for utilities have raised electricity rates without adding any real benefits or value. Let’s set the record straight.
In 2005 the Montana Legislature passed a Renewable Portfolio Standard requiring Montana’s regulated utilities (NorthWestern Energy and Montana Dakota Utilities) to supply 15 percent of their electricity from new renewable sources by 2015. A little research reveals that this was a forward-thinking move by the Legislature that has helped to stabilize energy costs while jumpstarting economic development and protecting our clean air and water.
According to NorthWestern Energy’s own filings with the Public Service Commission, wind power purchased to meet the RPS has actually been cheaper than the traditional mix of coal and hydroelectricity. Between June 2009 and June 2010, the wholesale price for electricity purchased from Judith Gap, a large wind farm in Wheatland County, was notably lower than other resources.
That holds true even when you include the extra costs required to manage the variability of wind. Investments in energy efficiency, however, were the cheapest of all resources in NorthWestern Energy’s portfolio.
Here’s the comparison:
• Colstrip Unit 4 (coal): $56.05 per megawatt hour;
• PPL (mix of coal & hydro): $48.75 per MWh ;
• Judith Gap (wind): $29.25 per MWh, plus $8-13 per MWh for “integration” costs;
• Energy Efficiency: $4.80 per MWh.
Political pundits and PSC candidates around the state are also making misleading claims that a recent request from Montana Dakota Utilities to raise rates for their Montana customers by 13 percent should be blamed on our RPS. While some of the rate increase is required to develop new wind resources, more than half of the costs in this requested rate hike are to cover other things entirely, including lost wholesale revenue, and development costs for Big Stone II, a coal-fired power plant in South Dakota that was never built. MDU admits on its website that it is asking Montana customers to pay nearly $3.8 million for this abandoned power plant that will never generate a single megawatt of electricity.
When compared with fossil fuel resources, wind provides much greater long-term price stability for utility customers, simply because there is no fuel supply cost. Prices for finite supplies of coal and natural gas are notoriously volatile and will only rise as global energy demand grows.
When Montana’s Renewable Portfolio Standard was enacted in 2005, there was very little wind development occurring in the state. This law has spurred economic investment in Montana by giving the industry a clear message: We’re open for business, and we want clean energy.
Furthermore, the RPS has helped to ensure that more of the profits from energy development actually stay in Montana. The community renewable energy provision of the law establishes that a portion of the RPS must be met with small projects owned by a majority share of Montana-based businesses or organizations.
Once you look past the smokescreen of laissez faire energy politics (which, don’t forget, brought us the nightmare of deregulation), the path forward is clear.
Montana’s utilities need to aggressively invest in efficiency while continually ramping up the proportion of clean, renewable energy in their supply portfolios. Montana’s RPS is the best tool we have to get the job done.
(Ben Brouwer is the Energy Program Manager for AERO, Montana’s Alternative Energy Resources Organization, a nonprofit organization that seeks to advance resource conservation and local economic vitality.)