Power company says future unknown

By The Associated Press - 04/17/2008

HELENA (AP) — NorthWestern Energy told regulators Wednesday that rising fuel costs and the potential for carbon taxes are making it difficult to map the utility’s energy future.

NorthWestern says it is hard to predict what will happen with carbon rules in Congress. Such rules, and the potential for a special tax, could impact decisions in trying to find the cheapest power sources for Montana consumers.

The company says the tax, and rising fuel costs, mean that Montanans will likely be paying more for electricity in coming years regardless of what is done.

“You are attempting to make a forecast predicting, when you have no idea what is going to happen,” said commissioner Doug Mood. “We ought to be warning people in this state that we have no idea what is going to happen to the price of electricity.” The cost that NorthWest-ern pays for electricity from such companies as PPL Montanan is largely passed on to consumers.

The Public Service Commission is reviewing the company’s plan for buying electricity in the coming years.

John Hines, NorthWest-ern’s chief supply officer, said the company is phasing in more long-term contracts as a way to steady market turmoil.

In addition, NorthWest-ern wants to get back into the energy production business it lost through deregulation and the transformation from the Montana Power Co.

Currently, NorthWestern does not have its own electricity production capacities.

Hines said the company is carefully taking “baby steps” toward building its own energy production abilities to further steady energy prices.

Such a move was allowed by legislation last year that undid some of the state’s so-called deregulation laws of the 1990s. Deregulation banned the utility from also owning power production facilites.

Commissioner Ken Toole told the company he believes there are strategies, such as conservation, that could mitigate the risk of fuel prices. Other commissioners also talked about the need to develop resources that don’t use fossil fuels.

Commission Chairman Greg Jergeson said he is critical of NorthWestern for not analyzing the possibility of allowing the utility arm of the company to buy the corporate parent’s interest in a Colstrip coal-fired power plant which they are considering selling.

Jergeson said that plant could provide valuable energy and help the utility.

“I think there are ways they could make that a valuable rate-based asset in their portfolio,” he said.

The PSC will offer written comments in the plan in a couple of months, which will help the company make decisions down the road, Jergeson said.