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MSTI’s future in doubt
Credit: By Tim Trainor of The Montana Standard | Posted: Tuesday, July 31, 2012 | mtstandard.com ~~
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Translate: FROM English | TO English
Hurdles are beginning to stack up against NorthWestern Energy’s proposed MSTI power line and the future of the project looks murkier than ever.
Market uncertainty, the lack of a solid major customer and environmental concerns have combined to put in doubt the approximately $1 billion, 430-mile transmission line that would run from southwest Montana to southeast Idaho.
NorthWestern CEO Robert Rowe addressed many of those setbacks when releasing the company’s second quarter earnings report last week. Others were noted in the company’s 10-K filing with the Securities and Exchange Commission. He said NorthWestern was “currently evaluating our efforts to continue pursuing MSTI.”
The latest hurdle was thrown up by the Idaho Bureau of Land Management, which ruled recently that routes that avoid core sage grouse habitat in southeast Idaho must be developed and studied. That is expected to delay rollout of the line’s Environmental Impact Study by more than six months. The delay will increase costs, could put the project behind competitors and adds more uncertainty into an already murky outlook.
Yet MSTI may never even get far enough to release an EIS.
The main customer for the power now appears to be the Oregon-based Bonneville Power Administration, which markets electricity in the Columbia River Basin. BPA has said it will decide by Sept. 30 if partnering with NorthWestern to build the line is a “priority.”
“If we determine an agreement with BPA is unlikely or can’t be completed on a timely basis, we may abandon the project,” said Rowe. “If we abandon our efforts to pursue MSTI, we’ll write off expenses, which could have a material adverse effect on our results of our operations.”
Through June 30, NorthWestern has spent approximately $23.5 million in survey and investigative costs toward the project, according to financial documents.
In the early stages of planning MSTI, California was targeted as a major potential customer of the energy that would be produced in Montana and sent south and west through the line.
Yet California now looks as if it will stick to plans calling for it to restrict importing out-of-state resources, making BPA the major player in the fate of the project.
Possible changes in renewal of production tax credits have added more uncertainty, according to NorthWestern spokesman Claudia Rapkoch.
Because of recent developments, NorthWestern now expects the project, if it goes forward at all, would not be completed until late 2018.
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