Colstrip, Climate and Electricity Rates Loom Large in Utility Board Race

Voters in districts two and three will fill two open seats on the Montana Public Service Commission

By Amanda Eggert for Montana Free Press

Credit: Power lines photo by Eric Dietrich/MTFP. Illustration by Stephanie Farmer/MTFP

Residents of some of the largest cities in the southern half of Montana will soon decide the fate of two open seats on the Public Service Commission, the board that regulates monopoly utility companies operating in the state. 

The election comes during a period of upheaval in Montana’s energy industry. Energy companies are coming to terms with federal regulations and financial incentives geared toward transitioning the nation’s power sector to cleaner energy sources, and Montana policymakers are grappling with a sweeping district court decision directing the state to consider climate impacts in its energy-permitting process. 

In addition to weighing a rate increase proposal forwarded by NorthWestern Energy, an investor-owned utility that serves some two-thirds of the state’s residents, incoming commissioners will be tasked with deciding the fate of a rulemaking petition asking the PSC to consider climate impacts in its oversight of the power sector, Montana’s second-largest source of greenhouse gas emissions. 

Two of the four candidates running for the commission are Republican state lawmakers who’ve garnered considerable name recognition in Montana politics. Brad Molnar of Laurel and Jeff Welborn of Dillon have nearly four decades of political experience between them, including multiple years on energy-related legislative committees. Their respective opponents are Susan Bilo of Bozeman and Leonard Williams of Butte, both Democrats with experience in the energy sector. They are entering Montana’s political fray for the first time, arguing that Montana ratepayers could benefit from regulators eager to challenge the status quo.

DISTRICT 2: BRAD MOLNAR AND SUSAN BILO

In the race for the District 2 seat, which includes most of Billings and half of Bozeman, the type of energy supplying electricity onto the grid loomed large in candidates’ interviews with Montana Free Press.

Brad Molnar, who has left the Montana Senate to run for his third four-year term on the Public Service Commission, said he’s been tracking the impact of federal emissions regulations targeting Colstrip “very closely,” given their influence on the continued operation of the state’s largest power plant.

The U.S. Environmental Protection Agency adopted the rules in question in April to clamp down on pollution that’s released when fossil fuels are combusted to create electricity. The Mercury and Air Toxics Standard (MATS) aims to reduce airborne emissions of heavy metals that are linked to cancer, birth defects and reproductive problems.

Complying with the rule would require Colstrip’s co-owners to spend hundreds of millions of dollars upgrading the plant to more effectively filter its emissions. The plant’s owners have until 2028 at the latest to comply with the MATS rule, which has become the subject of multiple lawsuits. 

Molnar said he was “severely disappointed” that the PSC didn’t file a lawsuit to oppose the regulations, which he described as putting Montana’s energy consumers in a Catch-22. If the rule makes the 40-year-old plant “uneconomic” and forces its premature closure — a potential outcome NorthWestern acknowledged in a 2023 financial filing — Molnar said NorthWestern’s customers will be burdened with hundreds of millions of dollars tied up in a stranded asset. If plant co-owners decide to make the required upgrades, the bill for doing so “will go straight to the consumer,” he said.

Molnar was on the commission in 2008 when it voted to allow NorthWestern to recover $407 million for the Colstrip acquisition from its ratepayers, a decision that followed NorthWestern’s suggestion that it had found another buyer willing to pay that price for the ownership share. NorthWestern had purchased the ownership share the prior year for $187 million, so the commission’s decision effectively created a windfall for the company it regulates. 

It’s a vote that has drawn criticism from NorthWestern watchdogs for years, but Molnar maintains that it was a sound decision based on the information available at the time.  

Had NorthWestern decided to sell its ownership share, Montanans would be stuck with few, if any, options for electricity generation, he argued. He also described the vote as representative of one of the larger dynamics at play in the world of utility regulation.

“You’re a commissioner — you never carry good news. There is no good news on the horizon,” he said. “You wanted the job. You’re getting paid the big-boy wage. Do the job.” (Commissioners earn one of the highest salaries among state employees, about $114,000 annually.)

If elected, Molnar will also likely be asked to decide the fate of a petition that 41 nonprofits and businesses submitted earlier this year on the heels of the Held v. Montana youth climate ruling. The commission has thus far not indicated if they believe rulemaking is warranted, but Molnar maintains that “the law is clear” that it’s not the commission’s place to consider climate as part of its regulatory oversight of utility companies.

“The PSC may not consider externalities. Climate is an externality,” Molnar said. “We are locked in by law.” 

Molnar went on to criticize Kathy Seeley, the Lewis and Clark District Court judge who sided with 16 young Montanans in a lawsuit seeking to reform the state’s energy policy due to its climate impacts. 

At the Montana Legislature, Molnar developed a reputation for his willingness to buck the party line. In practice, that can look like voting against an (ultimately unsuccessful) NorthWestern-drafted bill that would have allowed the company to fully recover from its customers Colstrip’s undepreciated value and remediation expenses. Dubbed a “wish list for NorthWestern,” that measure had widespread support among Molnar’s fellow Republicans in the Senate, despite the vigorous public opposition it garnered. During his 12-year tenure at the Capitol, Molnar proposed a handful of out-of-the-box bills, including one directing lawmakers to study the transition of investor-owned utilities like NorthWestern into cooperatively owned utilities, something Nebraska did the better part of a century ago. (Like all of the bills Molnar proposed in the past two legislative sessions, it failed to pass.)

Molnar’s competitor for the seat is Susan Bilo, a Bozeman resident and political newcomer who formerly worked for the National Renewable Energy Laboratory and currently teaches courses on energy efficiency and renewable energy technologies at Gallatin College.

While campaigning the past few months, Bilo said she’s been struck by voter reports that “the current commissioners lack the knowledge and expertise to stand up to Northwestern Energy.”

It’s a sentiment that resonates with her, too, she said.

Bilo argued that renewable energy projects have not been given fair consideration because commissioners “are not open to current, factual, updated information in their decision-making.”

She said she’s concerned that Montana is “going to get left behind” in the energy transition as a result and that ratepayers will get stuck with higher energy bills.

“I think most people aren’t aware that utilities don’t really care if the facility costs more because they’re guaranteed a rate of return on their investments and to recover their costs,” Bilo said.

Whereas projects like the $310 million gas plant NorthWestern recently built in Laurel can earn utilities more money, Bilo said utility-scale wind and solar projects are generally cheaper than their fossil fuel counterparts, “even with battery storage, which makes it reliable.”

To support that finding, Bilo produced a 2023 report by Lazard, a financial firm that prepares an annual “levelized cost of energy” report that incorporates considerations like fuel costs and the operational lives of different energy sources in its analysis.

In April, Bilo was one of more than 80 individuals who testified before the PSC in favor of the climate rulemaking petition. She is critical of the commission’s decision to hold off on deciding its merits. “Commissioners get paid too much not to make decisions, and they decided not to decide on the petition,” she said.

Bilo added that while she thinks it’s appropriate for utility regulators to consider climate impacts in their regulatory role, she isn’t calling for an immediate closure of the Colstrip plant.

“I think we need to transition the community away from [coal],” she said, “so that folks can keep their homes and keep their kids in those schools.”

She said Montana policymakers should monitor one such transition underway in Kemmerer, Wyoming, where a former coal plant is becoming a nuclear power plant. 

That project is part of a larger coal-to-nuclear discussion that’s garnering attention in U.S. energy circles, even with the considerable time and expense associated with nuclear projects. (The TerraPower plant in Wyoming is estimated to cost $4 billion.)

Bilo said other energy news that’s captured her attention recently pertains to NorthWestern’s announcement in July that it will acquire another share of Colstrip. When combined with another planned acquisition, NorthWestern will have a 55% ownership share come January 1, 2026, increasing its coal generation capacity from 222 megawatts to 814 megawatts.

If elected, Bilo said she would work to ensure that such a considerable jump in the company’s generation portfolio won’t come at ratepayers’ expense. If the power it opens access to is destined for market sales to other utilities, ratepayers shouldn’t be on the hook for it, she argued. 

“We need to have it in writing and signed that Montana ratepayers will not foot the bill for those additional shares,” she said.

Molnar and Bilo have agreed to a debate that Montana State University’s Citizen Climate Lobby will host at 7:00 p.m. on Wednesday, October 16, in room 233 of MSU’s Student Union Building. 

DISTRICT 3: JEFF WELBORN AND LEONARD WILLIAMS 

In District 3, which includes the southwestern corner of the state and a diagonal slice of central Montana, voters will choose between Welborn, a Dillon resident who said he aims to bring an agricultural perspective to the commission, and Williams, an electrician and longtime union organizer.

Welborn, a termed-out lawmaker who is a professional auctioneer and owns a trailer dealership, describes himself as an “all-of-the-above” energy guy who’s familiar with “the ingredients that go into energy production, from hydro to the thermal resources — gas and coal.”

He told MTFP that he was inspired to run because the seat is open and he has policymaking experience in the energy arena. Welborn said he aims to  protect Montana consumers from unfair rate increases and ensure that Montana maintains a “business-friendly climate for energy investment.”

On the campaign trail, Welborn said he’s heard a lot about “double-digit inflation hitting people hard.” 

“People are wanting those representing them to be mindful of how tough it is to balance your monthly checkbook compared to what it was even two years ago,” he said.

Welborn said he’s been encouraged by the progress the commission has made to become a healthier agency since James Brown became commission chair in 2021. (A string of scandals in the early 2020s rocked the agency, resulting in a pair of lawsuits and an audit that garnered a scathing critique from lawmakers.)

“As a consumer and a voter … I think the commission has turned a corner over the last couple of years in being a more functional body,” he said.

Welborn described himself as an open-minded policymaker willing to “listen to folks that understand the issue.”

Until there are further advances in battery technology, Welborn said fossil fuels will have to be part of Montana’s energy mix to keep the grid reliable. He added that he’s interested in hydrogen as a potential source of electricity and has been following news surrounding a high-voltage utility line that would, if built, connect the eastern and western grids.

“It would create more competition in the marketplace, which could drive costs down,” he said, adding that he’s encouraged that project developers have proactively sought landowner support for the line. “I don’t see a downside to that line.”

Welborn’s opponent for the seat is Leonard “Lenny” Williams, who officially filed for the seat 30 minutes before the candidate filing deadline.

Williams’ pitch to voters is that Montana needs commissioners who will take a more hands-on approach to utility regulation and his 30-plus years of experience as a “journeyman wireman” have acquainted him with multiple energy sources, from natural gas compression stations to hydropower dams to wind farms.

“We’ve got to be open-minded to some of this new technology,” Williams said, adding that he’s bullish on renewable energy. “In Montana, we’ve got plenty of wind, we got plenty of sun in some areas. In some areas, we have small waterways that could be utilized.”

Whereas Welborn highlighted the strides the commission has made to shore up its reputation and improve its governance, Williams emphasized a recent legislative audit of the agency finding that only 23% of agency staff believe commissioners always exhibit high ethical standards.

“I think that’s a problem,” he said. “You need to listen to people who are really on the ground doing the work.”

Williams is also critical of both the 28% rate hike the commission authorized in 2023 and how commissioners have discussed that decision in recent months. 

“They’re blaming NorthWestern Energy for not giving them the right information. They’re blaming the staff, when they’re the ones that needed to write the check. It was a circular firing squad at that point,” he said.

Williams said he’s been troubled by how hard that increase has hit lower-income Montanans. He said he’s heard of one older woman who considered turning the pilot light off on her furnace to conserve natural gas. 

“I know that sounds a little off,” he said, but “that’s how concerned she was about every penny coming out of her purse.”

No debates have been scheduled between Welborn and Williams. 

The general election is November 5, although absentee ballots are slated to start arriving in some Montanans’ mailboxes in mid-October. 

To learn about the third seat on the commission up for election, where Jennifer Fielder and Elena Evans are facing off to represent Montanans in the northwestern portion of the state, read “Independent candidate challenges incumbent Republican for Montana utility board seat.”