Lawmakers muddy the water on renewable energy standard

This story was published in the Great Falls Tribune.

No one disputes that hydroelectricity is a renewable energy source. But Montana lawmakers are again considering whether power from dams should be included under the state’s renewable energy standard, and incentivized in the same way as wind, solar and geothermal power.

On Tuesday, the Senate Energy and Telecommunications Committee kept alive a debate that’s spanned three legislative sessions by endorsing two bills that would define hydropower as a renewable energy source.

But the bills are markedly different—perhaps even contradictory.

Senate Bill 31, sponsored by Dillon Republican Sen. Debby Barrett, would make all existing hydroelectric dams eligible for renewable energy credits, potentially swamping the renewable energy market and scuttling incentive for all other renewables. Barrett said last week the bill represents “an honest discussion about what is a renewable energy source.” But opponents say it’s a backhanded attempt to undermine the renewable energy standard. The bill passed the Republican-controlled committee 7-6.

Senate Bill 45, sponsored by Butte Democrat Jim Keane, appears to represent the middle ground on the issue. It would incentivize only dam expansions, such as PPL Montana’s recent upgrade of the Rainbow Dam near Great Falls. That bill passed 12-1, and figures to have a better chance of reaching Gov. Steve Bullock’s desk.

Keane says SB 45 is about fairness and diversifying Montana utilities’ energy portfolios.

“If we’re going to require people to buy renewable energy credits, we should give the option for various sources to supply that,” Keane said in an interview last week.

The Montana Legislature passed the state’s renewable energy standard—officially called the Renewable Power Production and Rural Economic Development Act—in 2005. Sponsored by then-state Sen. Jon Tester, the law requires utilities to get 15 percent of their power portfolio from renewable sources by 2015, a threshold the state’s main utilities, NorthWestern Energy and Montana-Dakota Utilities, are on track to achieve.

The law has been a boon to Montana’s wind industry, with wind energy capacity jumping from two megawatts to nearly 650 megawatts since the law’s passage, according to the Montana Department of Commerce.

But some wind energy advocates fear that adding even hydropower expansions to the list of eligible renewable energy sources would water down the renewable energy standard and undercut the booming wind industry.

During last week’s hearing, Jeff Fox, of the Renewable Northwest Project, testified against the bill. He said his group opposes any additions of eligible renewable resources without increasing the 15-percent standard. Utilities generally consider the standard a ceiling, not a floor, he said, “and as a floor it really is a low threshold.”

The Northern Plains Resource Council and Montana Environmental Information Center both said they could support the bill without its effective date of Dec. 31, 2010. The retroactivity would allow PPL Montana to earn renewable energy credits for its recent $230 million, 24-megawatt upgrade of the Rainbow Dam.

“You’re basically giving money to a corporation to do something that they’ve already done,” MEIC’s Kyla Maki said in an interview.

PPL Montana Director of External Affairs David Hoffman, in testifying in favor of the bill, said it would make hydropower a “first-class citizen in the renewable world.” He said in a subsequent interview that if the Rainbow Dam upgrade qualified for renewable energy credits, they’d be worth to the company as much as $200,000 per year.

Sen. Mitch Tropila, a Democrat from Great Falls, asked Hoffman during the hearing if PPL Montana would support the bill if it wasn’t applied retroactively.

“Not with the same enthusiasm,” Hoffman replied.

Hoffman can remain enthusiastic. On Tuesday, the committee roundly rejected Helena Democrat Christine Kaufmann’s proposed amendment to strike the retroactivity from the bill. She called it a “fatal flaw,” noting that the windfall for PPL Montana was why former Gov. Brian Schweitzer vetoed a very similar bill in 2009. Kaufmann cast the only vote in opposition to SB 45.

Groups joining PPL Montana in supporting the bill include the Great Falls Chamber of Commerce and the Confederated Salish and Kootenai Tribes, who are in the process of acquiring PPL Montana’s Kerr Dam near Polson.

Both bills now move to the Senate, which must reconcile that the measures “work in cross-purposes of each other,” as Chinook Democrat Sen. Greg Jergeson said on Tuesday. If lawmakers pass SB 31, he added, they’d “eliminate the benefit” of SB 45.