Power Tripping

By Beacon Staff

Things have been pretty interesting on the energy front the past month – as you would expect when energy gets mixed with politics.

Most folks know that Flathead Electric Cooperative has been installing a partial “smart grid” here, in hopes of efficiency gains and better cost allocation. But will things pan out? Consider this bit of news from Boulder, Colo., a college ecotopia that makes Missoula look normal: Xcel Energy is asking for a rate increase to cover the $45 million it spent making Boulder a “SmartGridCity.” The Denver Post reported that doing so involved installing “smart meters,” laying fiber-optic cables to 23,000 homes, and software so the smart meters could talk to home base. The cost per installation? $1,947 each! Ouch!

While Xcel says the system is helpful at “managing blackouts, voltage surges and maintenance,” the company has decided this spendy little experiment will not be repeated or expanded.

Xcel now wants to recover its costs. The Boulder City Council, which backed the experiment to begin with, is now “neutral.” While the official reason is a lack of “consensus” over whether SmartGridCity is of “value” or was a prudent investment, the real reason is more likely pressure from “nonprofit” groups that are demanding that Xcel stockholders, not Boulder ratepayers, take the bath.

The Post reports that Xcel is most likely to recover about $30 million through a rate increase. Will they eat the rest? Once … and this little bait-and-switch fiasco is not being ignored in the boardrooms of other power providers.

Then there is the idea, and implications, of renewable energy standards (RES). As you’ll remember, Montana has an RES of 10 percent (increasing to 15 percent in 2015) for public utilities (not electric co-ops). That became law in 2005, passing by one vote in the state Senate, when Sam Kitzenberg (remember him?) switched his vote. The bill’s sponsor? Now-U.S. Sen. Jon Tester.

On Aug. 12, Montana-Dakota Utilities asked the Public Service Commission for a 13 percent rate hike, mainly because of the higher cost of renewable power. The Billings Gazette reports MDU ratepayers, mostly in eastern Montana, will be hit with a 14.5 percent net increase – about $100 per year per household.

Now, why would 10 percent more power cost 14.5 percent more? Oh yeah, renewables cost more. With RES’s set to rise again to 15 percent in 2015, MDU and Northwestern will inevitably be back for what is sure to be more … don’t forget, the first facilities to be built are usually the low-hanging fruit that are easiest and cheapest to bring on line.

Electric co-ops are exempt from Montana’s RES, so co-ops can breathe easy, right? Well, consider the Highwood Generating Station near Great Falls. Southern Montana Electric, a co-op consortium, proposed a 250-megawatt coal plant. Their motive was, among other things, expiration of contracts with Bonneville Power by 2011. SME was fought fang-and-claw to a standstill by environmentalists.

SME may still be able to protect its customers with “Plan B,” a 120-megawatt natural gas plant, for a time. But any other Montana co-op looking to use fossil fuels is going to have to fight the greens in court.

Even better, as the impact of RES’s are felt by utility customers, it won’t be long before they begin looking for ways for co-op users to share some of their fiscal joy. In fact, last week there was a squabble in the interim Energy and Telecommunications committee over regulating co-ops under the Public Service Commission.

That idea died, but the committee then turned around and voted 7-1 to approve draft bill language to crank up Montana’s RES to 20 percent by 2020, and 25 percent by 2025. Doing so before the full pinch of current law is felt is premature, of course. All higher RES’s will do is compound the misery of utility customers already stuck with a punitive, unfair burden.

So I wonder: Is the stage being set for co-ops to be roped in for not only RES compliance, but regulation by the Public Service Commission in Helena this winter? Or is Montana’s RES law on the way out? Either way, expect some power-tripping.