NorthWestern Energy’s Mountain States Transmission Intertie Will Provide Economic and Environmental Benefits

The following comments were provided by Dave Gates, NorthWestern Energy’s VP of Wholesale Operations including transmission operations, in response to a column by Commissioner Brad Molner that appeared in The Montana Standard on August 20, 2009.

A recent exchange between Public Service Commissioner Brad Molnar and four legislators raised some questions about NorthWestern Energy’s Mountain States Transmission Intertie (MSTI) power line proposal.

Rather than rehash the arguments, let me restate the information needing clarification.

We, at NorthWestern Energy, are rebuilding a supply of cost-based “rate-based” electricity to protect our customers from the fluctuations of regional market prices.

Transmission projects such as MSTI will enable development of Montana’s great renewable resources. Clearly, this will be good for local economies across Montana and help to address environmental concerns including climate change. These new energy sources need a pathway to market, which is the key reason to construct MSTI.

The cost of building MSTI will be recovered from the electric customers who actually use and benefit from the line.

The process of selecting a final route for MSTI or any other transmission line is designed to take into account landowner, environmental, cultural, economic and other concerns.  This process is ongoing.

The only way to fully insulate ourselves from the electricity market is to own our own rate-based energy supply.  These are energy sources that are dedicated to our Montana customers at cost-of-service rates instead of market rates. NorthWestern’s customers have been tied to and exposed to those markets since Montana Power Company sold its rate-based coal plants and dams (over the objection of its employees), and customers began paying market prices.

Since the law authorizing NorthWestern Energy to once again rate base electricity supply passed in 2007, we’ve locked in about 25 percent of our supply into rate-base.  We’re looking right now for cost-effective renewable projects as part of our ongoing effort to replace market-based contracts over time.  We also are building Mill Creek Generation Station, which will provide critical “regulation” services (keeping the system in balance) for our customers, so that we won’t have to purchase these services on the market.

As a regional transmission operator, we are required by federal law to build transmission necessary to meet the demand.  Currently, there are approximately 5,000 megawatts of new Montana energy sources that want access to our transmission system for the purpose of selling energy to customers. 

The demand for this energy is largely out-of-state.  Most of the new proposed projects are renewable--wind and hydro--as that is the future of energy development.  This creates an opportunity for “Made in Montana” environmentally-responsible clean, renewable resources to help energize the nation, just as farmers and ranchers grow crops and raise cattle to help feed the nation.

In addition to MSTI, our “Collector Project” is a set of up to five new 230 kV transmission lines (depending on need) that will connect these new Montana energy sources to the existing transmission system and then to MSTI.  Assuming that they are all built, that will eventually add 2,000 MW of new capacity to the system, which is roughly equal to the expected combined capacity of the MSTI and the planned upgrade to the Colstrip Transmission System. 

Because the existing transmission system already has more demand than available capacity, new transmission such as MSTI is necessary to relieve the bottleneck that exists on the southwestern end of our system.  We have existing reservations of space on MSTI and will be conducting another Open Season that will update those reservations and add additional capacity reservations.  To protect the competitive information of these shippers, FERC regulations require that the identities of participants remain confidential.

Documents we have submitted to FERC clearly show that MSTI is being built to serve new generation for export. These documents also clearly show that MSTI’s customers, who directly benefit from the line, rather than the existing customers of NorthWestern Energy, will pay costs associated with MSTI.

Return to October 2009 Western Energy News

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