Over the last two years, the Montana Public Service Commission has been better known for its five members' headline-grabbing infighting than how it's regulated state utilities. One commissioner described the recent dysfunction, including a game of musical chairmanship and a series of ethics complaints, as "sandbox antics," a "circus" and "Survivor Island."
But as bad as the PSC has behaved of late, some renewable energy advocates may look back at this time as the good old days.
Republicans swept Democrats in the three races for open PSC seats in the Nov. 6 election. Long-time Hamilton legislator Bob Lake ousted Missoula incumbent Gail Gutsche. Democrat John Vincent lost to Bozeman Republican Roger Koopman. And, in the race to replace term-limited Laurel Republican Brad Molnar, Republican Kirk Bushman beat Democrat Chuck Tooley. The results mean that, come 2013, the five people who regulate Montana's utilities and energy prices will all be Republicanwith a decided hostility toward renewable energy.
Lake, who will represent Missoula, Ravalli, Granite, Powell, Mineral, Sanders and Lincoln counties, opposes the two primary wind energy incentives on the state and federal levels. He says the federal Production Tax Credit for wind energy, which will sunset at the end of the year unless Congress renews it, should be allowed to expire. He also wants to repeal, or at least weaken, Montana's renewable energy standard, a law, drafted by then-state Sen. Jon Tester in 2005, that requires utilities to get 15 percent of their energy from renewable sources by 2015.
"The authority and the responsibility of the PSC is so focused," says Lake, "that I believe that we have the opportunity to tell people that are either trying to force things in [such as wind power] or trying to drive things out [such as coal] to say, 'I'm sorry, that's not going to work here, because we have the obligation for the [cheapest] power.'"
Lake, currently a state senator, seeks to change the state's definition of renewable energy resources to include hydroelectric power. The change would effectively remove incentives for utilities to tap wind, solar and other renewable energy sources. The PSC doesn't have the authority to make that change, but Lake says that, come January, "I will be in front of the legislature pleading my case." Before the 2011 legislature nixed watering down the renewable energy standard, Montana Conservation Voters Program Director Sarah Cobler said, "It would destroy the law that has done so much for us and I think is the biggest environmental victory in the last 10 years."
Fellow incoming Republican commissioner Koopman also opposes "propping up" renewable energy.
"If people want to see wind energy or geothermal or solar ... then the best thing to do is to allow the rigors of the marketplace to provide the incentive for their technologies to improve," he says. "... Let's not create winners and losers through government interventionism, but believe in freedom."
The state and federal incentives opposed by the new PSC members have been boons to Montana's wind energy industry, helping it grow from one megawatt of capacity in 2005 to around 400 megawatts today, with hundreds more megawatts set to come online in the coming years. NorthWestern Energy, the state's largest utility, says it's on track to meet the 2015 renewable energy target.
More than that, as renewable energy advocates point out, traditional fossil fuels also benefit from subsidies, and they have for decades. In fact, the Production Tax Credit, which became law in 1992, was intended to put wind power on a "level playing field," in the words of U.S. Sen. Chuck Grassley, R-Iowa, who authored the bill, with subsidized fossil fuels. As a March 2012 Congressional Budget Office federal energy brief noted, "Only four major tax preferences are permanent, three of which are directed toward fossil fuels and one of which is directed toward nuclear energy."
"[The Production Tax Credit] is not a subsidy that gains advantage," says Jim Jensen, director of the Montana Environmental Information Center. "It's only a subsidy that makes it equal, and all things being equal, wind is the cheapest, most reliable, cleanest energy that NorthWestern Energy is acquiring."
Jensen's point was made clear in February, when the PSC voted 3-2 to approve NorthWestern Energy's 40-megawatt Spion Kop wind farm, near Geyser. Its projected electricity cost is $55.42 per megawatt-hour, about $5 less than the average of the utility's portfolio, which draws heavily from coal-fired power plants. "Even if the state had no renewable energy standard, this project would still be cost-competitive and I would still vote to approve it," PSC Chairman Travis Kavulla, a Republican, said at the time.
Missoula's Gail Gutsche didn't return calls seeking comment. John Vincent, the other outgoing Democratic commissioner, says the new members of the PSCthe "coal candidates"need to recognize "the basic reality of the market and the new energy future." He believes that future includes an inevitable hike in the prices of coal and natural gas, cheaper energy from renewables and a continued emphasis on energy conservation and efficiency. Conservation, as NorthWestern Energy has acknowledged, is cheaper than any kind of new energy generation.
"My biggest concern is the new commission will turn its back on the best energy cost savings strategy of all," Vincent says.