The Montana Energy Security Act of 2019, Senate Bill 331, gives Montana an opportunity to manage our own energy future, while also securing the future of a part of the Colstrip coal-fired power plant and the future of the people who work and live in that community.
Senate Bill 331 will provide a foundation for NorthWestern Energy to pursue buying an additional share of Colstrip Unit 4 for more 24/7 energy for our Montana customers. This will then allow NorthWestern and Montana to have a greater voice in deciding how at least a portion of Colstrip will be managed in the future.
Whether your Montana home is in the mountains, along a river or on the windswept plains, you will be impacted by whether or not Montana has enough 24/7 power when you turn on your lights, turn on the heat, or soon, turn on the air conditioning. When you drive by a Montana wind farm ó there are more every year ó sometimes the turbine blades are spinning, which is a spectacular site. But other times the blades are still. Montana must have enough 24/7 energy when it is 20 below at 7 p.m. or 100 degrees at 2 p.m., whether or not the wind is blowing. Colstrip provides low-cost 24/7 energy in all weather conditions.
NorthWestern Energy must have more 24/7 energy to meet the peak demands of our customers. Extensive research shows that acquiring an additional share of Colstrip Unit 4 (NorthWestern Energy already owns a 222 megawatt share) is the lowest cost alternative.
Today our Montana customers face increasing risk because our electric portfolio relies heavily on electricity bought on the market to meet our customersí peak demands for energy. That marketís supply of energy in the Pacific Northwest is shrinking, with the planned retirement of 3,500 megawatts of coal-fired generation soon. The Northwest Power and Conservation Council forecasts peak energy shortages in our region of the U.S. within two years.
NorthWestern Energy has made significant advances in gaining additional owned-energy generation, particularly with the purchase of the hydro facilities in Montana in 2014, along with wind generation. But we need more 24/7 energy. Energy demand is increasing and the situation will continue to put our Montana customers at risk of both volatile price and supply shortages.
The numbers are sobering. In February 2018, the federal Energy Information Administration data shows the average cost of a megawatt hour bought on the Mid C Peak market was $21.61. In February 2019, the average cost was $92.84 a megawatt hour. Thatís a 329 percent change in one year.
Not all energy is equal when it comes to availability and that creates unique demands on the electric grid. Variable energy sources, such as wind and solar require 24/7 energy to balance their output and retain reliability in the grid. Colstrip is a source of 24/7 energy, in our own backyard. Because NorthWestern Energy already owns 222 megawatts of Colstrip Unit 4 and may buy another 150 megawatts in that same unit for $1 if Senate Bill 311 passes, the cost to produce a megawatt of electricity is about $20. We canít acquire or build another 24/7 energy generation source that will allow us to produce electricity for Montana customers at that price or lower.
NorthWestern Energyís priority is to provide safe, reliable energy at an affordable price for our customers. Senate Bill 331 will allow us to look at a deal that promotes that priority.
There is broad support for Senate Bill 331, from the Montana Public Service Commission, to Montanaís labor groups, the Montana Chamber of Commerce and others who value Montanansí budgets and the Montana economy. Montana owes it to all of us to support Senate Bill 331.
John Hines, NorthWestern Energy Vice President Energy Supply, Montana Government Relations