It's Time to Transition

By Ken Toole, President, The Policy Institute

It’s time Montana makes a transition away from coal power. Our existing coal plants are aging. In the next five to 10 years we face some decisions about what path we will take to the future. Refurbishing old plants is an expensive and short-term solution. Alternatively, building new coal plants is expensive and risky. Other states facing the same issue are more and more turning away from coal power.
But in Montana coal is king, wielding tremendous power in the political arena. We’ve all heard the arguments the proponents of coal power make. “It’s affordable, it’s reliable, and it’s clean, so let’s use it.”

So what’s not to like?

Let’s start with the idea that coal power is affordable. A report from the Public Service Commission shows Colstrip 4 power has cost us $67.84 per megawatt hour. That is a very high rate. This old plant usually provides us with around 25 percent of our power. A contract with PPL provides about another 25 percent of our power at $52.15 per megawatt hour. PPL’s price includes hydro-power along with coal. It is a safe assumption that PPL’s price averages the two together and that the operational cost of producing hydro-power is much less than burning coal.

Compare those prices with some of the other sources of power here in Montana. The Judith Gap wind farm has delivered power at $46.56 per megawatt hour. This price includes the “integration service” required by wind power and comes around 30 percent lower than Colstrip 4. The cheapest power we get is from energy conservation programs. Conservation costs less than $15 per megawatt hour saved, less than a quarter of the price of Colstrip 4.

So now let’s turn to the reliability arguments of the coal industry. Obviously, the total price is related to how much power is produced. Colstrip generating units 1 and 2 are about 35 years old and Colstrip generating units 3 and 4 are about 25 years old. We know that Colstrip 4 has had significant “outages” since it was brought into our rates and those have contributed to higher costs. Some argue that these outages are unique circumstances. But the fact is that old machines break down and these are old machines. Continuing to rely on these old power plants means the likelihood of outages increases and the need for expensive repairs and retrofits is a certainty. Consumers pay either way.

Then, of course, there is the pollution problem. Coal plants emit toxins which cause a variety of maladies from asthma to hair loss. They use massive amounts of water and they produce a poisonous sludge which must be controlled and processed. The coal mines which feed the Colstrip plants affect the ground water and disturb the landscape requiring large expenditures on reclamation. And there is the carbon issue. The evidence continues to mount that our continued reliance on fossil fuels is having profound impacts on the planet. I’ll leave it to history to judge the inaction of politicians and rhetoric of pseudo-scientists who deny the impacts of carbon on our climate.

Meanwhile, the nation’s coal fleet is aging. Utilities across the country are facing decisions. They can spend massive amounts of money refurbishing old plants. They can try to find financing for new coal plants which incorporate unproven and expensive technologies such as carbon sequestration. Or they can begin the gradual transition to a fleet of new power sources that are cleaner, more reliable and much more affordable over the long run. More and more those utilities are starting a transition away from coal toward renewable power sources like wind and solar.

In Montana we do not have a very good record of making wise decisions about our energy path. We’re still suffering from electric deregulation. We often fall for the pitch from hucksters and charlatans. I can just hear it now. “Pssst, hey buddy, I’ve got a real deal on a coal plant for ya. It’s cheap, it’s clean and it will last forever.” In the transmission away from old fossil fuel technology, Montana has a real opportunity to be a leader, but not if we stick with the technology of the past and our political habit of buying a pig in a poke.

Leadership Seminar Series Alumnae Make the News!

Three Leadership Seminar Series Alumnae (yes, that's the feminine plural of alumni!) have made the news in the past few weeks. Check out these articles featuring Kyla Wiens, Erin Switalski, Alexandra Scranton and Carrie LaSeur:

"Running on Empty Tour" comes to Montana | Great Falls Tribune

"Group protests chemicals in children's products outside Baucus' Missoula office" | Missoulian

"Keystone XL pipeline would screw over farmers, threaten aquifer" | grist.org

The Truth About the Power Line Struggle

By Ken Toole
President, The Policy Institute

I’m writing regarding the recent editorial about eminent domain and the struggles over power lines. The editorial made some factual errors that need to be addressed.
First, let’s address the current controversy over siting of two power lines, the Mountain States Intertie and the Montana Alberta Tie line. Each of these lines has its own particular issues which are varied and complex. But the editorial said there was no similar controversy when the power lines from Colstrip were built. That is simply wrong. The Colstrip lines were opposed vociferously. Some of my first political experience was on the “Hold the Line Committee” in the Bitterroot Valley which opposed the Colstrip line crossing the valley and successfully got it moved farther north.

In many ways the fight over the Colstrip line was the same as the struggles we are seeing today. Fights over power lines are very hot and very short lived. Often the opponents have little interest in broader policy issues or being part of any bigger picture. They simply want the line moved. If you move it over the next ridge the room fills with a different set of opponents. But, that does not preclude opponents from making policy and big picture arguments. Nor does that prevent public officials from mistaking the heat of a local power line fight for some kind of sustaining political base.

But the editorial also missed something very important. Traditionally the political alignment around power line projects is developers versus conservationists. That is not the case today. The editorial pointed to a piece written jointly by representatives of the International Brotherhood of Electrical Workers, a labor union that has typically been supportive of big power projects, and the Natural Resources Defense Council, one of the nation’s largest environmental groups. In addition, The Montana Environmental Information Center supported the legislation revising eminent domain laws and the Western Environmental Law Center is actively working on the MSTI proposal to develop a new process for siting with broad public involvement, community education and economic analysis.

Many environmentalists have moved beyond just saying no to new power lines. The reality is that the nation’s reliance on fossil fuels cannot continue. The threats posed by climate change, relying on other countries for our energy supplies and the price volatility resulting from fossil fuel commodity markets have to be addressed. Equally important, our electric infrastructure is aging and, no matter what the fuel source, it needs to be upgraded. And that is going to cost a lot of money. Our money should be spent making investments that move us away from continued dependence on dirty and expensive fossil fuels toward more efficient use of the power we have and development of clean, domestic and renewable sources of power. That means new power lines may have to be built.

The second error is the contention that wind power is more expensive than the alternatives, particularly coal. This is simply not true. The cost of energy we get from the Judith Gap Wind Farm is less than the cost of power you are getting from Colstrip 4. Somehow wind power has become fodder in an ideological struggle in the political arena. Some people simply refuse to see the technological advancement in wind power that has occurred in the last 30 years. Not surprisingly these same folks don’t see the same pattern as solar power is reaching commercial production scale. It is ironic that the same folks who scream about “subsidies” granted to renewable power sit silently as billions of dollars in subsidies, tax loop holes and support programs are handed out to various fossil fuel industries.

The advantages of renewable power development are significant and self evident. Montana could play a role in meeting the increasing demand for renewable power. We should do it on our own terms assuring that the people of the state benefit from any new development. But to those who simply say “no” I just have to ask, how much longer do you want to stay dependent on fossil fuels, and what kind of world are we leaving for our children?

Teresa Veltkamp (1972-2011)

We at The Policy Institute were deeply saddened by the news of the untimely passing of Teresa Veltkamp, a Class of 2010 Alumna of the Leadership Seminar Series. Teresa was a bright light in our program and inspired the January 2011 session which asked the question, "What Does Our 'Perfect America' Look Like?"

During the session, artist Grace Cheung created the piece you see here which includes images of justice, growth, peace and love against a backdrop of interlocking, multi-colored puzzle pieces. Thank you, Teresa, for being one of our puzzle pieces, and for making Montana a better place.

Great Plains Advocate Takes on Keystone XL

Leadership Seminar Series participant (Class of 2011) Carrie LaSeur has written a compelling, well-researched, articulate piece over at grist.com about the effects of the proposed Keystone XL Pipeline. Check it out.

Good Bills Given Little Consideration in 2011 Legislature

By Molly Severtson
Executive Director

Now that the dust has settled from the 2011 Montana Legislature, it is appropriate to look beneath the surface of the session – beyond the headline-grabbing bills: the spear-hunting bill, the nullification bills and the bill that would have ended the Endangered Species Act in Montana – to look at a couple of bills that were really good ideas, but were given little consideration during the session.

One of these bills was Senate Bill 398, introduced by Sen. Christine Kaufmann of Helena, which would have increased the progressivity of Montana’s income tax system by adding a high-income tax bracket to the tax code. As it stands, Montana’s income tax rates are almost flat, with a tiny bit of progressivity at the bottom end, meaning that a family with a taxable income of $14,000 a year pays the same tax rate (6.9%) as a family with a taxable income of $4 million a year. Montana is also one of the only states in the nation which taxes families living in poverty (6% for those with a taxable income of $3,000 a year).

Sen. Kaufmann’s bill would have increased the tax rate on taxable income of $250,000 a year and more to 11%. This change in the tax code would have brought in more than $80 million a year starting in fiscal year 2013.

The idea that progressivity – or ability to pay – is inherently the fairest type of tax system is an idea that goes back millennia, including the Biblical story of the widow’s mite. The idea behind supporting a progressive system is this: For a family making $20,000 a year, it is much harder to give up say 5% of their income – or $1,000 – than it is for a family making $300,000 a year to give up the same percentage of their income because their basic needs – and then some – are already being met. Therefore, it is fair to tax people at an increasing percentage in accordance with their income. The impact of each of the different tax rates on those families will be felt in much the same way, making the system fair.

It is also true that high-income people benefit at a higher level from the social infrastructure supported by a stable tax system, including public safety and public roads. If you own a profitable business on a busy street, you benefit at a higher level from people being able to access your business than someone who simply uses the same road to drive to a modest-paying job. It is to your great benefit that the road be maintained, and so it follows that you should contribute a higher percentage of your income to support it.

These are important issues that should be debated by our representatives in the legislature. But while the spear-hunting bill was passing out of the Fish and Game Committee 7-3 and passing 2nd and 3rd readings in the Senate, passage of SB 398 was never even voted on in the Senate Taxation Committee, let alone debated on the Senate or House Floors.

Another bill worthy of careful consideration was Sen. Mary Caferro’s Senate Bill 360, a bill that would have enacted a refundable, state-level earned income tax credit – or EITC – in Montana. Republican hero President Ronald Reagan is often quoted as touting the federal EITC as, “the best anti-poverty, the best pro-family, the best job-creation measure to come out of Congress.”

As structured in SB 360, a state EITC in Montana would have cost the state about $33 million per year, less than half of what SB 398 would have brought in. In addition, studies have shown that low-income families typically put their EITC right back into the local economy, paying a month’s rent, buying groceries or making a needed car repair.

Initiatives to enact EITCs have often been met with bi-partisan support in other states, and in the 2009 Montana Legislature, an EITC bill passed out of the House of Representatives with Republican support, but in this session, just like SB 398, SB 360 got very little consideration in the Senate Taxation Committee. The bill was tabled on March 12 and died in committee.

Undoubtedly, the topic of tax fairness is complex and should be vigorously debated. Several important principals are related to tax fairness, including the equity of a tax system (whether or not it treats those at the same income levels and different income levels fairly), the simplicity of a tax system (whether or not it allows excessive loopholes and is understandable) and a tax system’s exportability (the extent to which the system taxes out-of-state individuals and businesses which benefit from the state’s infrastructure).

The knee-jerk reaction of many legislators, especially those on the far-right end of the political spectrum, is a continual cry for lower taxes in the name of economic development despite the fact that reliable studies have consistently shown that state tax rates have little effect on business decisions. However, the quality of a state’s infrastructure has been shown to have a large effect on such decisions, and the state’s infrastructure – its roads, its public safety, its educated workforce – are all supported by a strong, stable tax system.

Overall, this legislative session was mostly one of defense for progressive taxation advocates, and the hard work of many people prevented many bad bills from passing. But the time taken to debate the legitimacy of bills Gov. Schweitzer called “frivolous,” “silly,” and “just bad ideas,” took time from serious bills that deserved serious debate and serious consideration including Senate Bills 398 and 360.

Leadership Seminar Series in Indian Country

The Policy Institute will present the Leadership Seminar Series in Indian Country, June 30 and July 1, 2011, at Hearth View Center in Arlee, Montana.

The event, designed specifically for Native American participants, will feature presentations and discussions led by prominent Indian leaders such as Montana Superintendent of Public Instruction Denise Juneau, and will cover topics like Indian voting history and current trends, and bridging the urban/rural divide of Native Americans in Montana.

The event will be presented at no cost to participants and will include one night’s stay (Thursday, June 30) at the Heart View Center in Arlee, dinner on Thursday (June 30) evening and breakfast on Friday (July 1) morning.

If you are interested in attending, please feel free to contact Molly Severtson for more information.