Proposal would add water to list of renewable energy sources

By MATT VOLZ - Associated Press | Posted: Tuesday, January 11, 2011 9:19 pm

HELENA - State lawmakers are considering adding hydroelectric power to the renewable energy standard, a proposal conservationists say will water down renewable development and Montana's largest utility says would amount to market manipulation.
The measure sponsored by Sen. Debby Barrett, R-Dillon, would define water as a renewable resource. That change would allow electricity produced by large hydroelectric facilities to count toward state renewable resource requirements.
Montana utilities are required to procure 10 percent of their retail electricity sales from renewable resources, such as wind power, through production or by purchasing renewable energy credits. That number jumps to 15 percent in 2015.
State law now counts only smaller hydroelectric facilities of 10 megawatts or less toward those requirements. Barrett's bill would make all existing dams and hydroelectric facilities eligible renewable energy resources, as long as they are not federal facilities.
Barrett said the legislation was authored by a constituent named Steve Jennings, who said he is president of the Beaverhead Outdoors Association. Jennings told the Senate Energy and Telecommunications Committee on Tuesday his intent was to level the playing field for Montana businesses when it comes to power generation.
"We're picking winners and losers. We're saying, we're going to pick wind but only this hydropower and not that hydropower," Jennings said.
An unlikely alliance of conservationists and utility companies have united against the bill, albeit for different reasons.
The bill would add so much hydroelectric power that companies required to comply with the renewable energy standard would not have to develop any new resources for the next 20 years, said Kyla Wiens, an energy advocate for the Montana Environmental Information Center.
"This bill would essentially make the existing renewable energy standard meaningless," Wiens said. "If all this hydropower is added, there's no need to get any new renewable energy."

About 40 percent of Montana's electricity comes from hydroelectric power. The proposal would add approximately 1 gigawatt of existing power to the state renewable energy standard, she said.
NorthWestern Energy, the state's largest utility, said it is opposing the bill because generators would be able to sell their hydroelectric power to the utility at a premium if it is reclassified as a renewable resource.
Those generators, such as PPL Montana, would also be able to sell renewable energy credits to out-of-state interests, putting them in competition with NorthWestern.
The result would be a windfall for generators that electricity customers would end up paying for, company representatives said.
"Our concern is that what you're doing here legislatively is, you're manipulating the market," company lobbyist John Fitzpatrick told the committee. "And we have problems with market manipulation because it ends up distorting prices."
PPL Montana, which owns and operates 11 hydroelectric dams that produce about 600 megawatts of power, supports the bill but said NorthWestern Energy was off in saying PPL would see windfall profits from it.
"What we would end up with under this bill is a drawer full of (renewable energy credits) that they don't need, that have no value, that can't be marketed in other states. It's that simple. We really don't have anything to benefit by this bill," company spokesman Dave Hoffman told the committee.
Barrett said she believes the incremental increases in the renewable energy standard are "smoke and mirrors" that ensure certain companies can make money while the taxpayers subsidize their renewable energy initiatives.
But the intent of the bill is only to recognize that water is a renewable resource, and the measure should not be a disincentive to developing wind power or other renewable resources in the state, Barrett said.
"If NorthWestern or anybody else can afford to develop it on a level playing field, they should go ahead," she said. "I would like to see a product produced economically so we can purchase it economically."