MESSAGE
As U.S. oil exploration enters a new chapter with the Bakken shale, BNSF Railway is along for more than just the ride. Photo courtesy of BNSF Railway.
Montana consumers and this chairman of the PSC are grateful for the impact of the Bakken on energy prices. natural gas rate drop by nearly half since
the two companies. At the same
the high mark of $11.52 per dkt in 2008.
time, both utilities are reaping, to some
Whether it’s the extra wiggle-room
extent, the benefit of lower-cost market
in the average Montana family’s winter
purchases pushed down in part by low
heating budget or the impacts of the
natural gas prices.
Bakken boom providing good-paying
Even the typically more expensive
jobs for Montana families, the Bakken
renewable power sources, such as wind
contribution is much appreciated.
and solar, are realizing a cost benefit
Despite the increasing demand
of the Bakken effect on energy prices.
for electricity to service the Bakken
These intermittent power resources,
region, low natural gas prices, driven
which in Montana are mandated by
by new native supplies, have had a
law upon customers of two public
positive impact in the reduction of
utilities, must be “firmed” (replaced or
market electricity rates and, to a lesser
supplemented) when the wind isn’t
extent, on the retail electricity rates
blowing or the sun isn’t shining. That
of Montana’s two regulated electricity
back-up function is typically done with
utilities, NorthWestern Energy (NWE)
single-cycle natural gas generation or
and Montana Dakota Utilities (MDU).
by purchases in organized electricity
The lower natural gas prices translate
markets. Additionally, rates paid by NWE’s
to significantly lower fuel costs for the
Montana customers for independent
limited gas-fired electrical generation of
wind generators supplying energy are
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BAKKEN OIL REPORT – SPRING 2013
currently set by the PSC using a formula based primarily on the cost to build and operate a natural gas generation facility. Lower natural gas prices equal lower wind energy prices for Montana consumers. Whether it’s lower fuel (natural gas) costs or lower market prices for “firming” the intermittent renewables, or lower payments to wind generators, the Montana consumer and this chairman of the PSC are grateful for the impact of the Bakken on energy prices. The PSC also connects with the Bakken in other important ways. We provide safety inspections of, and set rates for, Montana’s intrastate natural gas and petroleum pipelines. Also, the Montana PSC was formerly the state Railroad Commission. (It’s still an automatic loss-of-job plus a criminal misdemeanor for a PSC employee to take