MTPR

Study Predicting Dire Consequences From 'Clean Power Plan' Criticized

Nov 18, 2015

A University of Montana study funded by the state’s largest electric utility predicts dire economic consequences to the state because of the president’s plan to reduce carbon dioxide emissions. The study is drawing sharp criticism from advocates of alternative energy.

A University of Montana study funded by the state’s largest electric utility predicts dire economic consequences to the state because of the president’s plan to reduce carbon dioxide emissions. The study is drawing sharp criticism from advocates of alternative energy.

A study by the University of Montana, and funded by Northwestern Energy, predicts the president’s effort to cut carbon dioxide emissions will decimate the economy of eastern Montana.

“To be compliant with the regulation and still keep power flowing to customers exerts a negative impact on the economy. We're looking at a smaller economy regardless of how you measure it.”

Patrick Barkey directs the university’s Bureau of Business and Economic Research. The report he issued Wednesday afternoon predicts the eastern portion of the state will lose over 7,000 jobs, with paychecks totalling over half a billion dollars a year, if Colstrip power plant and its associated transmission line are abandoned by 2022.

“We're trying to redesign Montana's electric power delivery system for something other than what it was designed for. We've grown up with Colstrip in operation in South East Montana, and we've grown up with a system of transmission that is designed with that asset in operation. When that asset is gone then we’re presented with new challenges."

Barkey’s scenario is that the only economical way to meet a 47 percent cut in carbon dioxide emissions by 2030 is for Colstrip to go completely dark, for its 500 kilovolt transmission line to be abandoned, and for a new 250-megawatt gas-fired generator in Billings to fill part of the resulting hole in Montana’s energy supply. Under questioning from reporters at the Wednesday news conference, Barkey admitted that closing the 30-year-old power plant is not inevitable, but….

“It's more likely than not, and the reason why I say that is the scenarios by  which all units of Colstrip are not closed depend on the actions of people that are not in our control. For example the purchases of emissions credits from other states depends on those prices being low enough to make that a viable option, and depends on enough of those credits being available to head off the closures I’ve described.”

Barkey envisions not only a closed power plant and an abandoned transmission line in Montana’s future, but a total of 7,000 well-paying jobs, and the people who worked those jobs, disappearing, leaving behind empty houses, closed businesses, and fewer children in public schools. He calls it the biggest event to hit the state’s economy in three decades.

“A half a billion dollar decrease in personal income -- what is that? Well half a billion dollars is about half as large as the decline in personal income that occurred in Montana during the Great Recession.”

About half the seats at Barkey’s news conference were filled by members of various clean-energy and environmental groups. They could be heard chuckling or scoffing from time to time.  Afterwards, several stopped just short of accusing North Western Energy of fear-mongering.  Jeff Fox is Montana Policy Manager for the group Renewable Northwest.

“What NorthWestern Energy has done here is commission a study looking at the rather absurd scenario in which the state expends absolutely zero effort and planning for the implementation of the clean power plan, and in which companies themselves avail themselves of none of the options available to them for emissions trading, and they come up with the conclusion that that would be a bad economic outcome for the state.”

Fox notes that Governor Steve Bullock has just announced an advisory committee designed to draw up a state plan for meeting the EPA’s proposed carbon dioxide standards, and Barkey’s report ignores that, as well as the possibility of keeping Colstrip open by buying emissions credits from other states, as the EPA has proposed.

“Through hard work in cooperation, and quite frankly, hopefully the constructive work of NorthWestern Energy, we can find good ways to meet the clean power plan minimizing any economic disruption.”

Former Public Service Commissioner Tom Schneider agrees. Schneider, a Democrat who served twelve years on the commission, co-founded a group called Montanans for Affordable Electricity.  He says there are ways to meet the proposed carbon dioxide standard without blowing a hole in the state’s economy.

“NorthWestern should and could play a real constructive role there. They’re an important player. They have a lot of resources. They need to be at the table in a constructive way. This is a real bad way to start.”

Schneider says Barkey overlook alternative scenarios. For example, renewable energy sources such as wind and solar facilities could use the existing Colstrip transmission line, and conservation initiatives could reduce electricity demand, while emissions credit trading could allow Colstrip to stay partly in operation, if NorthWestern and other electric utilities chose to get creative.

“I think the future is very bright. It is not this cataclysmic catastrophe that is reflected here, for sure.”

Opponents of the Clean Power Plan wasted no time issuing press releases quoting Barkey’s report to support their case against it. The Montana Chamber of Commerce says it will continue to fight what it calls a misguided rule, and Republican Senator Steve Daines vowed again to stop what called the president’s “war on energy”.