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House panel approves amended bill allowing utilities to form nonregulated affiliates with ring-fencing safeguards
Summary
HB 911 would permit a regulated utility to form a legally separate, nonregulated affiliate to sell electricity to large industrial customers; the committee adopted amendments clarifying ring-fencing and lowered a megawatt threshold to 5 MW before passing the bill to the House floor, 8–6.
A bill to let Montana utilities create legally separate merchant affiliates to serve large industrial customers moved out of the House Energy, Technology and Federal Relations committee after amendment. Sponsor John Fitzpatrick described House Bill 911 as enabling a public utility to establish a nonregulated company (a merchant arm) to sell power to large customers while statutory ring-fencing would prevent utility assets from backing affiliate debt.
Proponents said the approach would encourage generation investment in Montana. Alan Olson of Northwestern Energy told the committee the bill forbids pledging utility assets and requires separation so regulated customers would not bear affiliate losses. "You cannot pledge utility assets," Olson said repeatedly in testimony when describing statutory protections.
Opponents and some committee members urged further study and clearer rulemaking authority for the Public Service Commission. Anne Hedges (Montana Environmental Information Center) and others argued that ring-fencing details, rule authority and timing need more deliberation. Brad Molnar, president of the PSC, testified he opposed aspects of the proposal and emphasized the commission's role in protecting customers and anticipating system impacts.
The committee adopted amendment 0.001, which expanded the bill’s scope to include transmission and distribution facilities, lowered the large-customer threshold from 20 MW to 5 MW, required a PSC demonstration that the affiliate will not use regulated transmission except as allowed by federal law, and stated the affiliate must operate "in accordance with the federal laws governing the sale of electricity." After roll-call votes the amendment carried 8–6 and the amended bill passed the committee on a separate roll-call, 8–6, sending HB 911 to the House floor.
