Montana Energy News Roundup

During the last week, several significant energy-related events that peaked my interest occurred. Here’s a brief summary of those that I think are worth noting:

–          Northwestern Energy (NWE) formally requested a withdrawal of the Mountain States Transmission Intertie (MSTI) Right-of-Way application from the U.S. Bureau of Land Management. NWE submitted the request for right-of-way over federal lands in 2007; NWE also submitted a MSTI-related application to the Montana Department of Environmental Quality (DEQ) for a Certificate of Compliance under the Montana Major Facility Siting Act (MFSA) in 2008. As proposed by NWE, the MSTI project consisted of a 500 kV transmission line and a 50+ acre substation that would traverse 400 miles of land in Montana and Idaho. The project met intense public opposition (under full disclosure, I was part of the vocal opposition to MSTI) because of several factors including project need, project impact on rate payers, project impact on land owners, and an unnecessary additional conduit for fossil fuel energy. Although the MSTI MFSA application still stands at Montana DEQ (we are told that there is no mechanism to withdraw a MFSA application), we consider the MSTI project dead. As John Vincent, a former Montana Public Service Commissioner said in reference to NWE’s recent request for the right-of-way application withdrawal:

Finally, we can now say “We told you so” on MSTI. We can go back fully 4 years to find in our records any number of findings and statements proclaiming the lack of need for and the non-viability of the MSTI project. We knew it years before NWE did, or at least before they were willing to admit they had made a major miscalculation and mistake.

Read the NWE request letter for the right-of- way application withdrawal here: MSTI BLM NWE ROW Application Withdrawal January 6 2014

Read more on MSTI and citizen concerns here: CCM website

–          The Northern Plains Resource Council and Carbon County Resource Council (CCRC) are challenging in court a decision by the Montana Board of Oil and Gas Conservation to prevent the public from testifying on a proposed oil well permit for the Belfry, Montana, (the Beartooth Front) area last month. A lawsuit was filed on January 8, 2014 with the Montana 13th District Court in Yellowstone County (Cause No. DV-14-0027 Dept. 3). Read more on this in: NPRC lawsuit

–          The controversy over sage grouse listing on the endangered species list is heating up and potentially impacts various energy and energy-related activities. As Andrew Gulliford notes in his High Country News op-ed on “ Who Speaks for the Sage Grouse”:

Across the West, politicians and oil and gas industry spokesmen are wringing their hands, shaking their heads and saying “no” to Bureau of Land Management proposals to set aside large swaths of land for the greater sage grouse, and for federal plans to list the separate Gunnison sage grouse as an endangered species.

The opposition to sage grouse ESA listing is not limited to politicians and fossil fuel industries, but also includes such diverse groups as utilities and ranchers. Other links on this topic include:

Montana Governor’s Advisory Council on Sage Grouse

BLM’s Greater Sage-Grouse on public lands web page

Montana Rural Electric’s position page: REA sage grouse position

Sage Grouse Initiative: Op-ed and NRCS Sage Grouse Initiative Information: NRCS

Keeping Sage Grouse Off the ESA Listing

U.S. Fish and Wildlife Service: Sage Grouse 

State of Montana – Establishing a Greater Sage-grouse Habitat Conservation Advisory Council: Montana Sage Grouse Advisory Council

 

Montana Senate Bill 180 Goes To The House

Montana rural landowners are gearing up to push Senate Bill (SB) 180 through the Montana House. SB 180 will repeal the power of eminent domain granted via the Montana Major Facility Siting Act (MFSA) as legislated in the 2011 session under House Bill 198. I’ve spent much time since the last Montana legislative session delving into how eminent domain law in Montana was changed by the enactment of HB 198 and also dealing with the potential impact of this on rural landowners.

I view this change in eminent domain law as largely a decision that favors economic development in rural areas being done at the expense of landowners. That may be a decision that the Montana legislature ultimately agrees upon, but it was a decision that did not result from an honest, open debate during the last legislative session. I think that this type of decision is best done via an interim study that incorporates input from a diverse set of Montana citizens.

However, for the moment, I think that SB 180 sets us on the path for a meaningful debate on how to handle eminent domain and merchant transmission lines. SB 180 will pull the power of eminent domain out of MFSA, and this first step is essential to take before any meaningful debate can occur. I say this because MFSA is basically an environmental review process that does not contain any vehicle for determining the facts necessary for condemnation, yet it gives the successful applicant the power of eminent domain. MFSA has also become more a political process than true environmental review process as evidenced by the fact that out of 37 projects proposed during the lifetime of MFSA, only one project has not been granted a certificate of compliance.

Additionally, I believe that the eminent domain power conferred via MFSA opens the gate for a variety of other energy facilities, in addition to the merchant transmission lines that have been central to most of the legislative debate on this issue. The power of eminent domain will go to any “person” who is granted a certificate of compliance for the following projects:

1. Nuclear (generation and storage: MCA 75-20-104 and 75-20-1202), hydro (MCA 75-20-104 and 75-20-204), and geothermal (MCA 75-20-104 ) energy generating facilities,

2. Certain transmission lines (MCA 75-20-104),

3. Certain major pipe lines (MCA 75-20-104),

4. Geothermal exploration (MCA 75-20-104),

5. Transportation links, pump stations and other facilities associated with the delivery of energy (MCA 75-20-104).

Some of the listed projects above requiring a MFSA Certificate are expressly identified as a public use in the Montana eminent domain statute 70-30-120, but others are not identified in this manner.  That means entities can be granted the power of eminent domain for projects that are not considered a public use. This is further evidence that use of the MFSA to delegate eminent domain was not fully considered.

Obviously the focus of last session’s HB 198 and the current session’s SB 180 is merchant transmission, but the questions of public uses and whether or not an entity must expressly be granted the power of eminent domain should be resolved given the variety of facilities that are still covered under MFSA and could be built using eminent domain. With no large impending projects looming under MFSA, we have time now to have a true public debate on these questions. This time we should do it correctly, and the goal of SB 180 is to start us on that path.

I’ve been asked how we can proceed with building merchant transmission lines as we sort this out. First of all, it is important to remember that many other kinds of entities, including various types of power companies, have existing authority to condemn property for construction of power lines in statute that is unaffected by SB 180: including the State of Montana, Municipal Utilities, Rural Cooperative Utilities and Public Utilities.

For building “merchant lines” specifically, there are currently a few options:

—–Use federal energy corridors that were established by several federal agencies in eleven Western states expressly to expedite the construction of high voltage transmission lines (established under the Energy Policy Act of 2005),

—– Bury high voltage direct current transmission lines in state highway and/or railroad right-of-ways,

—-The private, for-profit company can negotiate with a landowner for a true business partnership. This could include yearly royalties per tower, a fair one-time payment, or some other actual business partnership arrangement.

Montana citizens and legislators need to get behind SB 180 and get it to the governor’s desk!

Montana’s Legislative Response to Secretary Chu’s Use of Power Marketing Administrations to Upgrade the Electric Grid

Last Saturday, the Montana Senate unanimously adopted Senate Resolution (SR) 2 in response to the Department of Energy (DOE) Secretary Steven Chu’s March 16, 2012, memorandum that outlined his plan to upgrade the electric grid using power marketing administrations. The plan would utilize the nation’s four power marketing administrations (PMAs) – the Bonneville Power Administration, Western Area Power Administration (WAPA), Southeastern Power Administration and Southwestern Power Administration to transition to “… a more resilient and flexible grid”  (Joint Outreach Team Draft Recommendations, pg. 4) and to create more cooperation among system users. As envisioned in the 3/16 memorandum, this would be achieved by:

1. WAPA and Southwestern joining with third parties to develop needed transmission,

2. The PMAs creating rate structures that provide incentives for energy efficiency, demand response, integration of renewables, and prepare the grid for electric vehicle deployment,

3.The PMAs partnering with all owners and operators of the grid to improve grid reliability, and

4. The PMAs working with Congress to help streamline the complex regulatory system that governs them.

The Chu memorandum has generated much controversy. The National Rural Electric Cooperative Association (NRECA) quickly jumped into the fray and contended that under Chu’s plan, most of the upgrade costs would be borne by local energy users. Thus, customers’ power bills could dramatically increase to pay for the new grid system.

NRECA’s concerns hit home in Montana because WAPA is taking the lead in Chu’s plan and WAPA is a primary PMA for that part of Montana east of the continental divide. This means that several of the Montana electric cooperatives get their federal allocations from WAPA and utilize WAPA transmission. Consequently, the cooperatives have been very vocal about the potential negative impact of the Chu plan on their customers’ future rates.

DOE and WAPA formed an initiative called “Defining the Future” and a Joint Outreach Team (JOT – a joint team of experts from WAPA and DOE) in response to Chu’s grid upgrade plan. Hearings about the initiative were held in six locations throughout WAPA’s territory during the past summer. Rural electric cooperative reps showed up at the Billings, Montana hearing, and all expressed apprehension about the potential of increased rates. The JOT draft recommendations were published in late November 2012. Of note are some changes that the JOT made from the Chu plan –  … “the JOT decided not to pursue any recommendations specifically targeted at energy efficiency, demand response, or electric vehicles. Further, a number of the areas addressed through the recommendations are considered on a regional basis…” (JOT Draft Recommendations, pg. 5).

This brings us to the start of the 2013 Montana legislative session. JOT representatives gave a brief summary of their draft recommendations to a combined Senate Committee on Energy and Telecommunications and the House Federal Relations, Energy, and Telecommunications Committee during the session’s first week. This allayed some concerns, but SR 2 was still introduced the next week, which according to Montana Senator Olson at the 1/17 SR 2 hearing, “stems from communications between the Montana Legislative Interim Energy and Telecommunications Committee and DOE”.  Senator Olson further noted during the hearing that WAPA and DOE had recent meetings regarding the future of transmission needs in this part of country, but that none of the policy was communicated to the Montana legislature. A letter from the Senate Energy and Telecommunications Committee was sent to DOE about the lack of communication, but Senator Olson characterized DOE’s response as “snarky”. Thus, SR 2 was crafted in order to make sure that DOE received the Senate’s remarks on the initiative by the close of the comment period on 1/22/2013.

It will be interesting to see what happens with the initiative and SR 2, but this all is reminiscent of the last Montana legislative session and the hearings on HB 198 (the bill that granted the power of eminent domain to many a corporation). Several of the same concerns, including increased power rates and lack of notification, were raised during these hearings. What goes around comes around.