Inverted Block Rates & Decoupling, approved

I just had a chance to watch the MT PSC's meeting from last week.  It was a long and complicated meeting, but here is the outcome as I heard it:

• Decoupling is approved on the Electric Side only
• Inverted Block Rates are approved for both electricity and natural gas

It is important to keep in mind that these are pilot proposals, with a (i believe) 4 year time horizon.  The PSC should have an Order out in mid-December, which will clarify a number of the procedural issues around implementation.

A previous post on the topic, implied that the splits for inverted block rate groups would apply to all consumption by the individual.  Based on what i heard, this is not the case.  All customer would get the benefit of the the reduced rate for their first 350 kWh.

Please, by all means, comment if i got the decision of the meeting wrong.  I had been waiting for Mike Dennison, Charles S. Johnson or frankly anybody to write up the meeting, but alas...

Inverted Block Rates & Decoupling, MT PSC meeting Tomorrow @ 1:00

The MT PSC has scheduled a work session on NorthWestern Energy's general rate case for tomorrow at 1:00 pm.  The, ah, lame duck PSC has a chance to approve some very significant policy proposals, and in my opinion, steer Montana energy policy in a positive direction.  The PSC streams live, with a link on their main page.

In that context I like the spin that Senator elect Caffero and Human Resources Council District XI executive director Jim Morton, put on it in today's Missoulian.


"Furthermore, the two measures would create a more customer-focused utility. NorthWestern Energy is poised to move from a simple energy utility trying to sell as much power as possible to a full-service energy company focused on providing its customers a range of products, from electricity to energy efficiency.

Montanans can have a utility that doesn't have to sell us a kilowatt-hour of electricity rather than an equal amount of efficiency to recover its costs and turn a profit. We can adopt a more rational energy policy that protects our health and environment and lowers our energy bills."

SMG&T Dodges a bullet

I had previously posted about how SMG&T was having trouble with understanding its obligations upon reserving transmission (see the inaugural post).  Yesterday the FERC resolved the situation (at least until NWMT appeals), in favor of SMG&T. 

The FERC's decision is available here.  FERC's rational is, and even in context of the topic, technical.  Basically, NWMT did not have SMG&T execute the correct contract for the type of transmission service that they secured.

I am a little disappointed. SMG&T had held some valuable transmission capacity for a long-time, and the FERC's decision did not penalize them for not doing better due diligence.  Gaelectric and Naturener, and other wind developers might have been able to get projects moving without the request in the way.

Some Energy News, and a taste of the new PSC majority

• I watched with interest the exchange between Commissioner Molnar and PSC staff over NorthWestern Energy's request for interim rate relief on Mill Creek.  The exchange starts 28 minutes into the PSC's stream which is archived here.  Commissioner Molnar's comments, and his vote against the request, demonstrate that he is opposed to NorthWestern Energy using the plant to meet their balancing needs.  Permanent rates for the facility could be in jeopardy with a new PSC majority....  
• Senator Tester has an Op-Ed out defending the MT RPS standard and discussing his role in its passing.  
• The Great Falls Tribune offers Tim Gregori an opportunity to explain why public power is not dead, and in his continuing nepotism he cites his own work, and not that of actually successful public power (ie: Flathead Electric). 
• Someone has filed an interconnection request for 125 MW of wind NE of Greycliff Montana in Sweet Grass County Montana.  

PPL Protests NorthWestern Energy's classification of Montana's Import Capacity

You would be excused for not knowing what a triannual market power study is, and how important it is to Montana consumers.  At its most basic level, this is the analysis completed by each utility and wholesale power provider to demonstrate to the Federal Energy Regulatory Commission that they do not have monopoly power and should not have the price they sell power for be regulated by the FERC.

NorthWestern Energy filed their triannual market power study in June of this year.  Given that NorthWestern Energy owns very little generation assets the exercise is more of a formality.  But PPL (Pennsylvania Power and Light, who acquired the majority of Montana's Powers Hydro after deregulation) disagrees in some assumptions of the study, and has filed a limited protest of NorthWestern Energy's study.

The third page of the protest demonstrates what PPL is after:

"Not completely scaling down the generation located in the NorthWestern BAA results in the SIL being understated for each of the four season.  Because PPL Companies and other generators located in NorthWestern's BAA may rely on NorthWestern's SIL in their own market power analyses, NorthWestern's Revised SIL Study must provide an accurate accounting of the import capacity into the NorthWestern BAA. (p.3, emphasis added)"

A little interpretation is in order.  First, SIL is Simultaneous Import Limits, and it expresses the amount of electricity that can be imported into Montana.  PPL has a lot to be concerned about.  All else constant, the lower the SIL value is, the more likely PPL the FERC is to believe that PPL has market power and regulate the price they sell energy for.

Of course, we have been here before, and I do not think that I stand alone in the Montana Energy community in thinking that PPL has monopoly power and has used it in the past to gouge Montana Consumers for millions.  Hopefully this batch of Public Service Commissioners will be bold enough to get involved and protect rate payers.

Public Service Commissioners, standard for suspension

This post is not intended as an editorial for the Governor to take a specific action in regard to a specific commissioner (ex A, ex B).  It is just an observation that the rules for removal of Public Service Commissioners differ than those of other elected offices, and may afford the Governor a right.  

Montana Code Annotated, 69-1-113:

Removal or suspension of commissioner. If a commissioner fails to perform the commissioner's duties as provided in this title, the commissioner may be removed from office as provided by 45-7-401. Upon complaint made and good cause shown, the governor may suspend any commissioner, and if, in the governor's judgment the exigencies of the case require, the governor may appoint temporarily some competent person to perform the duties of the suspended commissioner during the period of the suspension.

I would be interested in the analysis of inquiring legal minds, and if any such precedent exists, but my read of the statute is that the Governor has the right to suspend a Commissioner.

Electric City Customer to go to NorthWestern Energy?

On Tuesday, it was reported that the City of Great Falls is interested in getting out of the  wholesale power business and asked NorthWestern Energy if they would consider acquiring their customers.  NorthWestern Energy responded with excitement, and has sent a response letter requesting load data and contractual commitments.  The Billings Gazette has a permanent archive of the story here.  And the Great Falls Tribune editorialized today that restraint is needed on the Electric City's behalf.

A couple observations on the proposed transaction come to mind.

1. At the highest level, this seams like a good idea.  There are certainly economies of scale in the wholesale power business, and the Electric City's current companions (SMG&T) have not figured those out.  
2. NorthWestern Energy should be interested, and could probably be persuaded to pay for the rights to these customers.  Think some discount of their authorized rate of return x the quantity of expected annual sales.  
3. The deal is not insignificant, as Electric City has a total demand of about 250,000 MWh.  This is about 5% of NorthWestern Energy's total load.  

I look forward to folks posting observations on the deal, especially those of Mr. Kavulla.