Guest Columnist: The realities of building a coal-fired plant

Having not forgotten the lessons I learned as your Public Service Commissioner for eight years, I always read with interest the reports on what the two current candidates for PSC District #1 are saying to the voters in their campaign.

I was startled and appalled at the complete disregard for the facts demonstrated by one of those two candidates when he promised a heavenly nirvana of low cost electricity and high government revenues by building coal-fired plants on the Hi-Line just down the road from Havre. He claimed, erroneously that these coal-fired plants would generate electricity that was cheaper than renewables and that nearby communities would get that cheaper power. He also promised that the revenues to government from these plants would be so enormous that we could build four-lane highways for 30 miles in all four directions from Havre.

While I was on the Public Service Commission, the proposed coal-fired Highwood Station in Cascade county was promoted as a source of low-cost electricity for the consumers of Great Falls and the member cooperatives of Southern Montana Electric. I predicted at the time that the business case for the plan was so flawed that it would result in bankruptcy.

After enormous losses, Southern Montana Electric went bankrupt, the members of the involved cooperatives in southern Montana are saddled with high costs to recover those losses, and the property tax payers of Great Falls have seen their taxes go up and many of their city services cut back to pay for the city's share of those losses. And now the candidate for the PSC from Cascade County is promising folks on the Hi-Line the reverse outcome from the same flawed kind of proposal.

Again, while I was on the Public Service Commission, Montana Dakota Utilities, which serves the eastern third of Montana, explored the notion of building a new coal-fired power plant to serve their growing load in eastern Montana and the Dakotas. Now, MDU has a reputation as the wielder of the sharpest pencils in the industry. In fact, they are so careful with their budgets that they didn't have to ask for an electricity rate increase for several decades. Despite the fact that this plant would have been co-located with an existing plant and coal resource, minimizing siting costs, fuel costs, and transmission interconnection costs, MDU couldn't make the business case pencil out for this plant and they abandoned it because the new plant itself would be so enormously expensive.

And while I was on the Commission, we approved the inclusion of NorthWestern Energy's ownership interest in Colstrip #4 into the utility's rate base. I believed that this well-cared for and maintained plant would yield electricity at rates favorable relative to other alternatives. Alas, I was mistaken.

According to figures available on the website for the Montana Consumer Counsel, that Colstrip power in the NorthWestern Portfolio has had the highest per unit costs for two of the last four years, has never generated power at less cost than the Judith Gap wind generation facility, and in only one year generated cost lower than the Spion Kop wind station. Those costs were not driven so much by the base capitalization cost which was known to us at the time, but by the unexpected repair and maintenance costs to operate the Colstrip plant.

I believe Colstrip #4 will continue to be an important component of the NorthWestern power resource portfolio for the foreseeable future. It is an important generator of jobs and economic activity in the surrounding communities.

But when the candidate suggests that new coal plants will generate lower power costs for nearby consumers, and revenues to build four-lane highways, let's remember that consumers of electricity in Colstrip pay the same rates as consumers in Havre or Hamilton, and Colstrip does not have four-lane highways in any direction. And, quite frankly, the PSC has no authority to keep the Colstrip plant open, nor to force it to close. NorthWestern Energy has a vested property right in the plant that the PSC cannot violate.

Those are the facts. The work of the Public Service Commission is complex and difficult. The voters should be wary of politicians who promise easy answers not based on reality.

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Greg Jergeson of Chinook is a former state senator and former public service commissioner