Consumer Economist Questions Dam Purchases

By Beacon Staff

BILLINGS — NorthWestern Energy’s proposed purchase of 11 hydroelectric dams could cost ratepayers $800 million over 15 years unless more risk is shifted to the company, an economist for the Montana Consumer Counsel said.

Economist John Wilson questioned some of the assumptions behind the company’s argument that the deal helps consumers, including whether a future carbon tax will make other forms of power generation more expensive, the Billings Gazette reported Friday.

The company said it stands by its analysis.

“We believe our assumptions are as well put-together as they could possibly be,” NorthWestern spokeswoman Claudia Rapkoch said. “Over the long term, this is definitely in the best interests of our customers.”

NorthWestern Energy has asked the state Public Service Commission, which regulates utilities, to approve the $900 million purchase of the dams from PPL Montana. The commission plans to decide the issue by fall.

The Montana Consumer Counsel is a state agency that represents consumers in utility hearings, and the counsel asked Wilson to analyze the dam proposal.

In written testimony to the commission, Wilson said NorthWestern used an “unreasonably biased” analysis to claim that power from the dams would be a better deal than power purchased on the open market.

He said consumers would be paying more for electricity even if no carbon tax is ever imposed. He also said ratepayers are being asked to pay $400 million more over the next eight years for benefits that only future ratepayers would see.

Tom Power, a retired University of Montana economics professor who represents a Missoula low-income group and an environmental group on the dam purchase, disputed Wilson’s argument.

NorthWestern’s assumptions make sense, and that the dam purchase would give ratepayers a good, affordable, long-term source of electricity, Power said.

“One would have to take rather extreme and untenable assumptions to make the hydro purchase appear to not be the preferred (electricity supply),” he said.

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