PSC Convening Discussion on Montana's Energy Needs

• September 28 2022

HELENA, Montana —

At its latest business meeting the Public Service Commission opened an investigative docket to address issues of resource adequacy and risk surrounding Montana's energy future. The Commission plans to work with regulated utilities in this sector to identify the size and scope of the issues facing Montana and the region. The issues will range from a full review of resource adequacy; to a stakeholder analysis of actors in the energy sector; to an analysis of the short- and long-term problems that will confront the sector during this time of transition. The Commission intends to use this docket to provide the catalyst, and the forum, for future discussion about resource adequacy – and how to ensure that Montana customers' energy needs are met. Vice President Brad Johnson remarked, “This is no longer a hypothetical situation. Reality has to find its way into this discussion of Montana energy and generation capacity.”

Resource adequacy is an issue of national scope and concern. The North American Electric Reliability Corporation (NERC), in its 2022 Sumer Reliability Assessment notes that much of the country west of the Great Lakes is at high or elevated risk. The California Independent System Operator (CAISO) is calling for consumer usage reductions to avoid rotating outages. Extreme weather conditions in winter may also pose a threat as Commissioner O'Donnell mentioned during Tuesday's meeting.

Based on traditional capacity-based approaches, the West may appear resource adequate, but could be resource inadequate in terms of its ability to produce energy at peak demand. In an analysis that is representative of resource adequacy concerns, the Western Electricity Coordinating Council’s 2021 Western Assessment of Resource Adequacy reveals the following takeaways:

• Both demand and resource availability variability are increasing, and the challenges they present are worsening.
• Under current planning reserve margins, all subregions in the West show many hours at risk of load loss over the next 10 years.
• Subregions rely heavily on imports to remain resource adequate. In no case can a subregion be resource adequate on its own.
• As early as 2025, all subregions will be unable to maintain 99.98% reliability because they will not be able to reduce the hours at risk for loss of load enough, even if they build all planned resource additions and import power.
• And finally, to mitigate resource adequacy risks over the near-term (1–4 years) and long-term (5–10 years), planning reserve margins need to be increased—in some cases significantly—or other actions taken to reduce the probability that demand will exceed resource availability.

The PSC will convene both Montana and regional experts, neighboring states, power producers, and stakeholders who will be invited to contribute to a conference to be held in the first week of November. Attendees will explore discrete steps that can be initiated to improve intra-, interstate, and regional coordination concerning resource and transmission planning. This conference should be regarded as opening the conversation on the topic, rather than resolving the issues discussed. This investigative docket looks to provide a forum for education and discussion centered around Montana's energy future, a topic deserving both awareness and strategic planning during a time of increasing risk.

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