Cost Sample Letter

Background: NorthWestern Energy ignores the cost figures provided by the Montana Consumer Counsel. Its CEO, Bob Rowe, said in an op-ed on March 4 in The Great Falls Tribune that the company’s cost for Colstrip coal-fired electricity “is below $20 per megawatt hour.” But the Consumer Counsel uses the figure of $74/MWH. What gives? Neither of those costs includes the external costs of burning coal and adding greenhouse gases to our atmosphere. Does NorthWestern Energy assess the costs to our forests, rivers, farms as temperatures rise? The fires of 2017 burned almost 1.5 million acres and cost $400 million. Montana had to cut essential services for hundreds of thousands of people to pay for its share of the cost. How long can we ignore these costs? We’re getting to the point where addressing climate change and building a renewable infrastructure costs less than paying for all the damage.

Date

NorthWestern Energy
11 East Park Street
Butte, MT 59701

The Montana Public Service Commission
1701 Prospect Street
Helena, MT59701

The Montana Consumer Counsel
P.O. Box 201703
Helena, MT 59620-1703

Dear Montana Energy Officials,

Please accept my comment on NorthWestern Energy’s procurement plan.

Building new renewable energy infrastructure will provide more cost-effective electricity than maintaining old coal plants. The nonpartisan and well-respected Montana Consumer Counsel The Office of Consumer Counsel is established in the Montana Constitution to advocate on behalf of the interests of consumers of regulated utilities before the Montana Public Service Commission and in some other matters. It found these costs:

Energy Source Cost for NorthWestern Customers
($/per megawatt hour)
Colstrip Unit 4 (Coal) $74
Judith Gap (Wind) $30
South Peak (Wind) $22

Did NorthWestern Energy use these costs, and, if not, why not?

The Colstrip plants were off-line for more than a month last summer for failing to comply with the EPA’s Mercury and Air Toxics Standards, forcing NorthWestern to buy electricity on the spot market

Some questions:

  • How often in the past five years has Colstrip been unable to provide power for Montana ratepayers?
  • Does NorthWestern Energy build in the repeated down times in its costs for coal-fired electricity?
  • Bloomberg reported that the prices NorthWestern Energy paid on the spot market were lower than the cost of Colstrip power. How often does the company use power from Colstrip that is more expensive than the spot market? Shouldn’t a comparison of Colstrip power vs. the spot market be part of the company’s procurement plan analysis?

Bloomberg also reports that the company’s supplies coal are no longer secure because the plants’ principal supplier, Westmoreland Coal, went bankrupt, threatening three-quarters of Colstrip’s power production with higher costs. Coal from the Westmoreland mine already costs Colstrip some $150 a year and is some of the highest priced coal in the region.

With two of Colstrip’s four plants going off-line in 2017 in a court-ordered settlement with environmental groups, how is Westmoreland’s bankruptcy and presumed higher-priced coal going to impact the company over the 20 years profiled in the procurement plan?

And has the company modeled these rising fuel costs compared to renewable sources of energy that do not pay for fuel because wind and sun are free?

Utilities in other states have analyzed coal plants built in the 1980s – like Colstrip – and they, too, found them more expensive than renewable energy. Did NorthWestern Energy use any of these cost figures in the decision it reached in its procurement plan?

Finally, in regard to the costs of fossil fuel generators, did NorthWestern Energy consider any of the external risks and costs associated with the burning coal or natural gas? Some climate scientists call these “external costs.”

One clear cost may be in the increased liability a utility incurs when higher average temperatures make powerlines more susceptible to starting fires. California’s utility, Pacific Gas and Electric, recently declared bankruptcy over the 2018 fires, which cost the state $3.5 billion, killed at least 86 people, and destroyed more than 1,800 structures. For PGE, however, the liabilities from the fact that its equipment started the fires may run to more than $50 billion.

Has NorthWestern Energy modeled any of the possible liabilities due to a warming climate and the vulnerabilities of its equipment?

In a broader sense, has NorthWestern Energy considered what Fortune Magazine describes as “the increasing vulnerability utilities face to natural disasters such as wildfires and hurricanes that are becoming more extreme.”

Why isn’t there any discussion in the procurement plan of these liability and external costs of building more fossil fuel infrastructure? Why isn’t there any discussion of the importance of limiting greenhouse gas emissions and the usefulness of renewable energy in doing so?

Until Montanans understand the complete costs of fossil fuels, it’s impossible to reach conclusions about future choices.

Sincerely,