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Committee debates bill letting utilities form separate merchant affiliates; concerns about ring‑fencing persist
Summary
HB 911 would let public utilities create legally separate merchant entities to sell power to large industrial customers, with statutory ring‑fencing provisions. Proponents argued it unlocks investment; opponents warned the safeguards and timing are insufficient.
Representative John Fitzpatrick told the committee HB 911 would permit a public utility to establish a legally separate, nonregulated company to sell electricity to large industrial customers while imposing a statutory “ring fence” to prevent commingling of finances.
Supporters said the measure would allow utilities to pursue merchant activity and attract generation investment without exposing regulated customers to merchant risk. Representative Fitzpatrick and witnesses argued federal law and the bill’s ring‑fence language will prevent utility assets from being pledged to merchant business debt.
Opponents worried that the statutory protections and the speed of the proposal are insufficient. Sarah Clerget, representing large customers, said her group is a “soft opponent” and asked for amendments guaranteeing the PSC’s rule‑making role, limits on affiliate competition, and explicit compliance with federal interconnection and pricing rules.
Brad Molnar, president of the Montana Public Service Commission, reiterated uncertainty about whether statutory language would prevent long‑term financial exposure for regulated customers and cited past deregulation‑era failures (bankruptcies and asset pledges) as a cautionary example.
Witnesses urging passage included Alan Olson of Northwestern Energy, who described existing federal “firewall” requirements and said the bill would allow shareholder (not ratepayer) funds to be invested in merchant ventures. Todd O’Hare of the Montana Chamber of Commerce said increased generation investment benefits statewide economic growth.
Committee members asked for and received an amendment that: (1) broadened the definition of covered generation beyond electric generation language in the original draft, (2) lowered a size threshold in one place from 20 megawatts to 5 megawatts, and (3) added language that the separate entity must not utilize the utility’s transmission facilities except as permitted by federal law. The committee adopted the amendment on a roll call.
On executive action, the committee voted to pass the amended bill to the House floor. The roll‑call on final passage in committee was recorded as 8 ayes and 6 noes; the clerk’s roll call names were recorded in committee minutes. HB 911 advanced to the House for further consideration.
