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Energy Measure Sparks Last-minute Legislative Drama

Bill would require NorthWestern Energy to absorb some of the financial burden that results from unexpected outages

HELENA — The uncertain fate of an energy bill championed by state regulators and spurned by NorthWestern Energy provided down-to-the-wire drama Wednesday in the waning days of the legislative session.

Lobbyists for both sides swarmed the Capitol in advance of a decisive vote on a measure that sought to bar the utility from passing on its entire cost of buying emergency power to its 360,000 Montana customers.

Last year, the Public Service Commission ordered the company to refund Montana ratepayers $8.2 million when the utility had to buy electricity from the open market following a 2013 outage of the Colstrip coal plant. The commission said the company should not have passed on those costs to customers.

For much of the session, the proposal mostly drew little attention — except from regulators and the South Dakota-based utility that saw the proposal as a possible financial hit.

The measure pushed by the Public Services Commission easily passed the House, only to later languish in the Senate’s Energy and Telecommunications Committee.

Last week, a legislative maneuver to blast it out of committee failed by two votes. On Tuesday, another blast motion unexpectedly succeeded. A floor debate ensued. A few minds changed. And the measure squeaked through for Wednesday’s final vote.

NorthWestern lobbyists sound to bend the ears of lawmakers, as regulators sought to hang on to votes.

In the end, the measure prevailed 29-21.

“There was a ground shift. This is the only time I’ve ever seen NorthWestern Energy not get its way with legislation,” said the bill’s sponsor, Democratic Rep. Tom Woods of Bozeman.

Woods called passage of the bill an important victory for consumers.

But David Hoffman, NorthWestern’s director of government affairs and chief lobbyist, said the battle wasn’t yet over. Efforts will now be focused, he said, on enlisting the governor’s veto to quash a bill he contends is unnecessary and punishes the company for unexpected outages it has no control over.

Regulators want to place NorthWestern under a cost-sharing plan already in place for other utilities. The arrangement would allow the company to pass on 90 percent of the cost of securing replacement power to ratepayers, while absorbing the remaining 10 percent.

The arrangement now enjoyed by NorthWestern was a relic of deregulation of some sectors of the energy industry.

Travis Kavulla, the commission’s vice chair, said the measure “provides an important incentive for utilities to operate efficiently and control costs, while allowing them the opportunity to earn a fair return on their investment.”

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