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Wind Stakeholder Interview: Montana Public Service Commission

Bob Anderson

Bob Anderson, Montana Public Service Commission, Helena, Montana

Wind Stakeholder Interview: Montana Public Service Commission

Date: 8/1/2002

Location: Helena, MT

"You don't have to be a utility commissioner to see that we need better regulatory policies to achieve the diversity, economic development, and environmental benefits of wind power." Bob Anderson, Montana Public Service Commission, Helena, Montana.

Q.Tell us a little about yourself and how you came to be a Montana commissioner.

A. I grew up in Livingston (the real windy city), Montana, on the banks of the Yellowstone River. When the Bureau of Reclamation proposed to dam the river to cool 40 coal-fired power plants in eastern Montana (the 1970 North Central Power Study), I had to get involved and learn more about energy policy. In 1990, I ran for the Montana Public Service Commissioner, partly as a way to influence electricity policy toward sustainable resources and technologies like wind power.

Q. What role do public utility commissioners play in wind development: state, regionally, and nationally? Do commissioners have a role in the formation of rules or of the RTOs and ISOs or with FERC?

A. At the state level, we oversee the resource choices of the utilities in our jurisdiction. We have an opportunity to define "least cost" to include non-price things like the environment, and we can give the utilities incentives to make the right choices. We also have the bully pulpit before the legislature.

Regionally, we participate in policy forums such as the Committee on Regional Electric Power Cooperation and work with our western colleagues on policy and projects.

Nationally, we can participate in the National Association of Regulatory Utility Commissioners (NARUC), especially its Committee on Energy Resources and Environment. As chairman of that committee, I helped develop policies and methods for aligning the interests of renewable energy developers, utilities, and customers. As president of NARUC in 1995, I broadened the dialog on electricity policy to include environment and sustainable development.

State commissions will be asked, depending on the states' statutes, to approve the transfer of utility transmission assets to the control of an RTO/ISO. The bottom line will be: is it in the "public interest?"

Q. Tell us how NARUC affects renewable energy policy.

A. NARUC adopts resolutions and sometimes large policy statements and documents. See, NARUC's 2001 Electricity Resolutions and Policy Positions  These become the basis for lobbying at Congress or the FERC.

Q. Despite the enormous wind resources in Montana, there is not 1 MW of wind capacity installed in the state. What are the chief reasons for this?

A. There are two reasons. First, Montana has transmission constraints. Any new generators have a hard time acquiring firm transmission capacity to serve out-of-state markets.

Second, Montana is a deregulated state, meaning the customers of NorthWestern Energy (formerly Montana Power Company) are served at market-based rates. It's up to NorthWestern to acquire resources to meet customers' needs. In its first attempt to buy wind, the Commission found NorthWestern's procurement process to be imprudent. NorthWestern has said it will issue another request for proposals soon.

Q. There was a lot of enthusiasm in the press around the Montana Power Company default portfolio submission of 150 MW of wind. Why was that denied by the Public Service Commission (PSC), and what is your expectation for wind being resubmitted in the near future by NorthWestern?

A. NorthWestern's procurement in the first default portfolio case did not pass the smell test, let alone prudent and industry-accepted practices. We're somewhat impatient, waiting for the next solicitation. To assist the solicitation, the Commission has just (11/27/02) issued procurement guidelines.

Q. How do you see the electricity growth being met in the West over the next 10-15 years? What are the key issues in meeting this growth?

A. Crystal ball gazing is usually fun and usually wrong. The fuels of choice in the last few years have been natural gas and wind. That trend is likely to continue, although there are serious doubts about the nation's ability to meet its projected needs for natural gas. If natural gas supplies fall short of demand, prices will increase and become more volatile; that could give wind an advantage.

Key issues include: climate change (inhibiting further coal development); environment (giving an edge to renewables); and transmission and wholesale power rules and policy (perhaps enabling better integration of wind into the interconnected western grid).

Q. What roles might Montana have in your future vision to meet this regional load growth?

A. Montana could rival California as a wind generator, but only if transmission issues are resolved. Even if they aren't, wind could meet up to a quarter of Montana's demand for electricity.

Q. Montana and many of its neighbors have a significant distribution rural electric cooperative system. What are their options/opportunities/issues in participating with western wind development?

A. Rural electric co-ops typically buy their power from federal power marketing agencies (e.g. Bonneville Power Administration - BPA, Western Area Power Administration - WAPA). BPA has a good renewables policy foundation in the 1980 Northwest Power Act. WAPA needs a similar foundation. Co-ops are likely to become wind enthusiasts because of the opportunities for rural economic development provided by wind power.

Q. Montana is slated for deregulation of its electricity prices in the next couple years. How do you see that affecting electricity consumers in Montana? Can wind play a significant role in providing a hedge against price risk to the Montana ratepayer?

A. As of July 1, 2002, all customers of the former Montana Power Company (now NorthWestern Energy) are served by an unregulated electricity supply (the Commission judges the "prudence" of the utility's procurement but not the price). Rates for generation jumped about 75%. MPC sold its generators to PPL Montana (a subsidiary of the PPL Corporation formerly Pennsylvania Power and Light) which now, because of transmission constraints, has undue market power. New generation can bring competitive forces needed by our customers. In addition, wind generation can help hedge against volatility of natural gas prices and avoid some environmental impacts.

Q. What is your perspective of net metering?

A. Net metering is a good policy that enables customers to control their electricity destiny. Its success depends on the utility's attitude (early reports on NorthWestern's attitude about interconnection are good) and compensating the utility for distribution revenue losses that result from generation on the customers' side of the meters.

Q. What should the wind industry and their environmental advocacy friends be doing to move wind forward in Montana?

A. NorthWestern Energy should be encouraged to issue an RFP for wind in its default supply portfolio. The Commission should be encouraged to apply integrated resource planning principles (in Montana law) to NWE's procurement. And the legislature should be encouraged to adopt more pro-renewables policies, such as a renewable portfolio standard.

Q. Looking back on your 12 years on the commission, can you highlight a couple events/decisions that significantly affected the climate for wind development in the West?

A. Wind has become a legitimate competitor in the bulk wholesale electricity market. Several things contributed: the Public Utility Regulatory Policies Act in 1978; aggressive policies by the California legislature and Commission; research and development, here and abroad; the federal production tax credit; public opposition to nuclear power; and public support for the environment.

Q. Looking into your crystal ball, how many megawatts of wind energy will Montana install by 2010 and what needs to happen for this to occur?

A. Three hundred MW of wind energy could be installed by 2010 as a result of public dissatisfaction with PPL's unregulated generation monopoly; continuation of the federal production tax credit; development of a robust system for trading renewable and other credits; improving the efficiency of the western transmission grid; decoupling NorthWestern's profits from electron throughput; integrating wind with other resources, especially hydro; and an enlightened legislature which passes a renewable portfolio standard.

This information was last updated on August 02, 2011