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UNDERSTANDING
ELECTRICITY IN MONTANA



hJw..




A Guide to Electricity,

Natural Gas and Coal

Produced and Consumed in Montana



December 2002



'S COLLECTiC:,



MONTANA SI Alt LioKARY

1515 E. 6th AVE.
HELENA. MONTANA 59620



Table of Contents

Acknowledgments i

Introduction iii

Glossary v

Summary Summary-1

Chapter 1: Electricity Supply and Demand I-l

Chapter 2: Montana Electric Transmission Grid II-l

Chapter 3: Natural Gas in Montana III-l

Chapter 4: Coal in Montana IV-1

Figures and Tables

Chapter 1: Electricity Supply and Demand

Figure El. Generation by fuel 1-3

Figure E2. Average output of Montana power plants, 1997-1999 (aMW) 1-4

Figure E3. Distribution of 2000 sales by type of utility (aMW) 1-4

Figure E4. Annual sales in Montana 1-5

Figure E5. Amount of growth in residential and commercial electricity sales,

population, economic activity in the 1990's 1-7

Figure E6. Cost per kWh, 1990-2000 (2000 cents) 1-7

Table El. Electric power generating capacity by company and plant as of November
2001 Ml

Table E2. Average generation by company, 1995-1999 1-12

Table E3. Average net electric generation and fuel consumption by company and

plant, 1995-1999 1-13

Table E4. Annual consumption of fuels for electric generation, 1960-1999 . . . 1-14



Table E5. Net electric generation by type of fuel unit, 1960-1999 1-15

Table E6. Annual sales of electricity, 1960-2000 1-16

Table E7. Average annual prices for electricity sold, 1960-2000 1-17

Table E8. Utility revenue, retail sales, consumers and average price per kilowatt-
hour, 2000 1-18

Table E9. Percent of utility sales in Montana and other states, 1999 1-19

Service territory maps 1-20

Chapter 2: Montana Electric Transmission Grid

Figure ETl. The Montana transmission network II-2

Figure ET2. The Western Interconnection transmission network II-3

Figure ET3. Rated paths on the transmission network II-6

Figure ET4. West of Hatwai path cumulative loading curve, Jan. -Aug. 2001 II-8

Chapter 3: Natural Gas in Montana

Figure NGl. Marketed gas production in Montana (1950-1999) III-2

Figure NG2. Natural gas consumption in Montana III-3

Figure NG3. Price of natural gas in Montana III-9

Table NGl. Natural gas production and average wellhead price, 1950-1999 . . . III-15

Table NG2. Natural gas consumption by customer class, 1950-2000 III-16

Table NG3. Average natural gas prices by customer class, 1950-2000 III-17

Table NG4. Average natural gas consumption and annual cost per consumer,

1980-1999 III-18

Table NG5. Regulated sales of natural gas by utilities, 1950-2000 III-19

Table NG6. Largest natural gas users in Montana III-22

Chapter 4: Coal in Montana

Figure CI. Historical coal production IV-1

Figure C2. Montana production and average price IV-2

Figure C3. Production by land ownership type IV-3

Figure C4. Destination for Montana coal IV-4

Figure C5. Changes in Montana production, share of U.S. market and severance tax
collections IV-5



Table CI. Coal production by state and coal rank, 2000 IV-7

Table C2. Montana coal production and average mine price by rank of coal,

1950-2000 IV-8

Table C3. Coal mining acreage, production and royalties from federal and American

Indian leases in Montana, 1980-2000 IV-9

Table C4. Coal production by company, 1980-2001 IV-10

Table C5. Distribution of coal for use in Montana, 1974-2000 IV-11

Table C6. Receipts of Montana coal at electric utility plants, 1973-2000 .... IV-12

Table C7. Distribution of Montana coal by destination, 1989-2000 IV-13

Table C8. Montana coal production, employment and severance tax IV-14



Digitized by the Internet Archive

in 2010 with funding from

IVIontana State Library



http://www.archive.org/details/understandingele2002mont



Prepared by the
Department of Environmental Quality

for the
Environmental Quality Council



Project Coordinator: Paul Cartwright



Authors of Area Papers and Statistics

Jeff Blend - Natural Gas

Paul Cartwright - Electricit/ Supply and Demand; Coal

Larry Nordell - Transmission



Introduction



Over the last five years, to talk about energy in Montana has been to talk about electricity. The
restructuring and sale of Montana Power Company, the California energy crisis, the potential for
new markets for Montana coal, all are facets of the electricity industry. Continued public and
private actions will be necessary to facilitate and to cope with the industry's on-going transition
nationwide. The Environmental Quality Council (EQC) has prepared this guide to provide the
background information policy makers and citizens alike will need to make the best decisions
they can.

The guide focuses on historical and current patterns of supply and demand, but also gives
some consideration to future trends. It lays out the background facts needed to interpret past
and future policies. The guide is divided into four sections. First is an overview of electricity
supply and demand in Montana. The second section covers the electricity transmission system,
especially how it works in Montana and the Pacific Northwest. This is the critical issue affecting
access to existing markets and the potential for new generation in Montana. A third section
addresses natural gas supply and demand, important in its own right and now much more
intertwined with the electricity industry. The final section covers the Montana coal industry,
which exists to fuel the generation of electricity and whose future will depend on what happens
in that industry.

The guide, with its focus on historical and current patterns, deals primarily with conventional
resources, which are most of what exists now. Nonetheless, Montana can expect to see
renewables take a larger role in electricity supply in the future. Energy efficiency (sometimes
referred to as energy conservation) also is only given brief treatment, simply because so few
data are available. Still, improving energy efficiency remains the cheapest way to meet energy
demand. Finally, this guide does not address petroleum and transportation issues, even though
that sector holds the potential for problems far larger than Montana has seen with electricity.
Public agencies, private business and individual citizens need to keep this possibility in the back
of their minds, even while they focus on the immediate need of dealing with electricity.



Ill



IV



Glossary



the following guidelines as closely as
possible:



General

Coal

Electricity Supply and Demand

Electricity Transmission

Natural Gas

General

British Thermal Unit (Btu): A standard
unit of energy equal to the quantity of heat
required to raise the temperature of 1
pound of water by 1 degree Fahrenheit (F).

Class of Service: A group of customers
with similar characteristics (e.g., residential,
commercial, industrial, sales for resale, etc.)
identified for the purpose of setting a utility
rate structure.

Cogeneration: A process that sequentially
produces useful energy (thermal or
mechanical) and electricity from the same
energy sources.

Consumer Price Index (CPI): This index
is issued by the U.S. Department of Labor,
Bureau of Labor Statistics as a measure of
average changes in the retail prices of
goods and services.

Demand-Side Management: Utility
activities designed to reduce customer use
of natural gas or electricity or change the
time pattern of use in ways that will
produce desired changes in the utility load.

End-Use Sectors: Energy use is assigned
to the major end-use sectors according to



Residential sector: Energy consumed
by private household establishments
primarily for space heating, water
heating, air conditioning, cooking, and
clothes drying.

Commercial sector: Energy consumed
by non-manufacturing business
establishments, including motels,
restaurants, wholesale businesses, retail
stores, laundries, and other sen/ice
enterprises; by health, social, and
educational institutions; and by federal,
state, and local governments.

Industrial sector: Energy consumed by
manufacturing, construction, mining,
agriculture, fishing, and forestry
establishments.

Transportation sector: Energy
consumed to move people and
commodities in both the public and
private sectors, including military,
railroad, vessel bunkering, and marine
uses, as well as the pipeline transmission
of natural gas.

Electric utility sector: Energy
consumed by privately and publicly
owned establishments that generate
electricit/ primarily for resale.

Fossil Fuel: Any naturally occurring fuel of
an organic nature, such as coal, crude oil,
and natural gas.

Fuel: Any substance that, for the purpose
of producing energy, can be burned,



otherwise chemically combined, or split or
fused in a nuclear reaction.



Implicit Price Deflator: A measure over
time of price changes of goods and
services. Unlike the Consumer Price Index,
it is not based on surveys of the cost of a
theoretical "market basket" of items, but
rather is derived from data collected for the
National Income Accounts. For this reason,
it reflects price changes in actual current
patterns of production and consumption.

Nominal Dollars: Dollars that measure
prices that have not been adjusted for the
effects of inflation. Nominal dollars reflect
the prices paid for products or services at
the time of the transaction.

Real Dollars: Dollars that measure prices
that have been adjusted for the effects of
inflation, using an index such as the Implicit
Price Deflator (see Implicit Price Deflator ).

Renewable Energy: Energy obtained
from sources that are essentially sustainable
(unlike, for example, the fossil fuels, of
which there is a finite supply). Renewable
sources of energy include wood, waste,
solar radiation, falling water, wind, and
geothermal heat.



Coal: A black or brownish-black solid
combustible substance formed by the
partial decomposition of vegetable matter
without free access to air and under the
influence of moisture and, often, increased
pressure and temperature. The rank of coal
(anthracite, bituminous, subbituminous, and
lignite) is determined by its heating value.

Anthracite: Hard and jet black with a
high luster, it is the highest rank of coal
and is mined in northeastern
Pennsylvania. Anthracite contains
approximately 22 to 28 million Btu per
ton as received.

Bituminous: The most common coal, it
is soft, dense, and black with well-
defined bands of bright and dull
material. Bituminous is ranked between
anthracite and subbituminous and is
mined chiefly in Kentucky, Pennsylvania,
and West Virginia. The heating value
ranges from 19 to 30 million Btu per ton
as received.

Lignite: A brownish-black coal of the
lowest rank; it is mined in North Dakota,
Montana, and Texas. The heat content
of lignite ranges from 9-17 million Btu
per ton as received.



Short Ton: A unit of weight equal to 2,000
pounds. All tonnages used in this
publication are in short tons.

Coal

Average Mine Price: The total value of
the coal produced at the mine divided by
the total production tonnage (see FO.B.
Mine Price ).



Subbituminous: A dull black coal
ranking between lignite and bituminous;
it is mined chiefly in Montana and
Wyoming. The heat content of
subbituminous coal ranges from 16 to 24
million Btu per ton as received.

Coal Rank: A classification of coal based
on fixed carbon, volatile matter, and
heating value.



VI



F.O.B. Mine Price: The "free on board"
mine price. Tinis is the price paid for coal
measured in dollars per short ton at the
mining operation site and, therefore, does
not include freight/shipping and insurance
costs.

Surface Mine: A mine producing coal that
is usually within a few hundred feet of the
earth's surface. Overburden (earth above or
around the coal) is removed to expose the
coal bed. The bed is then mined using
surface excavation equipment such as
draglines, power shovels, bulldozers,
loaders, and augers.

Underground Mine: A mine tunneling into
the earth to the coal bed. Underground
mines are classified according to the type of
opening used to reach the coal— i.e. drift
(level tunnel), slope (inclined tunnel), or
shaft (vertical tunnel).

Electricity Supply and Demand

Average Megawatt: A unit of energy
output over a specified time period. For a
year, it is equivalent to the total energy in
megawatt-hours divided by 8,760 (the
number of hours in a year).

Capacity: The amount of electric power
which a generator, turbine, transformer,
transmission circuit, station, or system is
capable of producing or delivering.

Demand: The rate at which electric energy
is delivered to a system, part of a system,
or piece of equipment at a given instant or
during a designated period of time (see
Load ).



Generation (Electric): The production of
electric energy from other forms of energy;
also, the amount of electric energy
produced, expressed in kilowatt-hours
(kWh).

Gross: The total amount of electric
energy produced by the generating units
in a generating station or stations,
measured at the generator terminals.

Net: Gross generation less the electric
energy consumed at the generating
station for station use. (Energy required
for pumping at pumped-storage plants is
regarded as plant use and is subtracted
from the gross generation and from
hydroelectric generation.)

Gigawatt (GW): One billion watts.

Gigawatt-hour (GWh): One billion watt-
hours.

Hydroelectric Power Plant: A plant in
which the turbine generators are driven by
falling water.

Kilowatt (kW): One thousand watts. The
kW is the basic unit of measurement of
electric power.

Kilowatt-hour (kWh): One thousand
watt-hours. The kWh is the basic unit of
measurement of electric energy, and is
equivalent to 3,412 Btu.

Megawatt (MW): One million watts.

Megawatt-hour (MWh): One million
watt-hours.



VII



Nameplate Capacity: The full-load
continuous rating of a generator, prime
mover, or other electrical equipment under
specified conditions as designated by the
manufacturer. Installed station capacity
does not include auxiliary or house units.
Nameplate capacity is usually shown on the
manufacturer's identification plate attached
mechanically to the equipment. Because
manufacturers have differing standards,
there may be no fixed relationship between
"nameplate capacity" and maximum
sustainable capacity.

Load (Electric): The amount of electric
power required by equipment in use at a
given time at any specific point or points on
a system.

PURPA: Public Utility Regulatory Policies
Act of 1978. First federal legislation
requiring utilities to buy power from
qualifying independent power producers.

Qualifying Facilities: Small power
producers or cogenerators that meet the
Federal Energy Regulatory Commission's or
the Montana Public Sen/ice Commission's
size, fuel source, and operational criteria as
authorized by PURPA.

Steam-Electric (Conventional) Plant: A

plant in which the prime mover is a steam
turbine. The steam used to drive the
turbine is produced in a boiler by heat from
burning fossil fuels (see Fossil Fuel and
Fuel).

Watt: The electrical unit of power or rate
of doing work. A watt is the rate of energy
transfer equivalent to 1 ampere flowing
under pressure of 1 volt at unity power
factor (volt and ampere in phase). It is
analogous to horsepower or foot-pound-



per-minute of mechanical power. One
horsepower is equivalent to approximately
746 watts.

Electricity Transmission

AC/DC/AC converter station: A back-to-
back, installation that takes Alternating
Current power on one side, rectifies it to
Direct Current, and then inverts the Direct
Current back to Alternating Current in phase
with a different system. These stations
provide for power transfers between
separate synchronous grids. They use the
same equipment— AC/DC rectifiers and
DC/ AC inverters— that are required at each
end of a long distance DC transmission line.

ATC: (Available Transmission Capacity) is

calculated by subtracting committed uses
and existing contracts from total rated
transfer capacity.

Contract Path: A path across portions of
the interconnected grid, owned by two or
more different owners, for which a
transaction has gained contractual
permission from the owners or other rights
holders with transferable rights.

Distribution: Relatively small, low voltage
wires used for delivering power from the
transmission system to local electric
substation and to electric consumers.
Compare with Transmission .

ERCOT: The Electric Reliability Council of
Texas, a separate synchronous grid
connected only by AC/DC/ AC converter
stations to the Western Interconnection and
the Eastern Interconnection.

FERC: Federal Energy Regulatory
Commission (formerly the Federal Power



VI II



Commission). The federal agency that
regulates interstate and wholesale power
transactions including power sales and
transmission sen/ices, as well as licensing of
dams on rivers under federal jurisdiction.

High voltage: Voltage levels generally at
above 69 kV. Some utilities also count 50
and 69 kV lines as transmission lines.
Transmission lines in Montana are built at
voltage levels of 100 kV, 115 kV, 161 kV,
230 kV and 500 kV. In other states lines
have also been built at 345 kV and 765 kV.
Canadian utilities build at still other voltage
levels. Direct current transmission lines
have been built at +/- 400 kV, which may
sometimes be described as 800 kV.

Impedance: A measure of the composite
force that must be used to push power
through an Alternating Current transmission
line. Impedance is composed of resistance,
inductance and capacitance. Resistance is a
property of the wire itself and is also
present in DC circuits. Impedance is a
function of expanding and collapsing
magnetic fields in coils (such as
transformers) in AC circuits. Capacitance is
a function of expanding and collapsing
electric fields in parallel wires in AC circuits.
Neither impedance nor capacitance is
relevant to DC transmission.

Inadvertent Flows: Portions of power
transactions that flow over portions of the
interconnected grid that are not on the
contract path for the transaction.

IndeGO: "Independent Grid Operator" A
failed effort, roughly 1998-1999, to form an
organization that would have taken over
operation of the Northwest transmission
system. The effort was revived and
superceded by the RTO West discussions.



Loop Flow: A characteristic of mass power
flows across the Western Interconnection in
which seasonal flows in the summer from
the Northwest to California, nominally
shipped south over the North-South
California Intertie, flow in part around the
eastern part of the interconnection through
Montana, Utah and Arizona and then back
into California in a clockwise direction. In
the winter seasonal flows from California to
the Northwest over the Intertie also flow in
part counter-clockwise through the same
sections of the grid. A similar phenomenon
is associated with seasonal shipment of
power from Arizona to California, where
portions of the power flow counter-
clockwise up to Montana and Idaho, into
the Northwest and then south into
California over the North-South Intertie.

Phase Shifter: A device for controlling the
path of power flows in Alternating Current
circuits.

Reliability: The characteristic of a
transmission system (or other complex
system) of being able to provide full,
uninterrupted service despite the failure of
one or more component parts.

Synchronous: Operating at the same
frequency and on the same instantaneous
power cycle. The Western Interconnection
is a synchronous grid, which means all
generators in the western grid are
producing power in phase with each other
(always at the same point on the same sine
wave). Other synchronous grids in North
America include ERCOT, Quebec, and the
Eastern Interconnection (the entire
continental U.S. except for ERCOT and the
Western Interconnection).



IX



Total Transfer Capacity: The rated abilit?/
of a transmission line, or group of related
transmission lines, to carry power while
meeting the regionally accepted reliability
criteria.

Transmission: High voltage electric wires
used for bulk movement of large volumes of
power across relatively long distances.
Compare with Distribution, which is
composed of relatively smaller, lower
voltage wires used for delivering power
from the transmission system to local
electric substation and to electric
consumers.

Unscheduled Flows: See Inadvertent
Flows .

Western Interconnection: The
interconnected, synchronous transmission
grid extending from British Columbia and
Alberta in the north, to the U.S. -Mexican
border in the south, and from the Pacific
Coast to a line extending from the Alberta-
Manitoba border through eastern Montana,
eastern Wyoming, western Nebraska and
the extreme west part of Texas.

West of Hatwai: A transmission path
consisting of ten related transmission lines
that are generally located in the area west
and south of Spokane, WA. The West of
Hatwai path is a bottleneck for power
flowing from Montana to the West Coast
and California and it is relatively heavily
used.



considerable quantities of liquid
hydrocarbons in the pentanes and heavier
range generally described as "condensate."

Gas Well: A well that is completed for the
production of gas from either nonassociated
gas reservoirs or associated gas and oil
reservoirs.

Gross Withdrawals: Full well stream
volume excluding condensate separated at
the lease.

Lease Condensate: A natural gas liquid
recovered from gas well gas (associated
and nonassociated) in lease separators or
natural gas field facilities. Lease condensate
consists primarily of pentanes and heavier
hydrocarbons.

Liquefied Petroleum Gases (LPG):

Propane, propylene, butanes, butylene,
butane-propane mixtures, ethane-propane
mixtures, and isobutane produced at
refineries or natural gas processing plants,
including plants that fractionate raw natural
gas plant liquids.

Marketed Production: Gross withdrawals
less gas used for repressuring, quantities
vented and flared, and nonhydrocarbon
gases removed in treating or processing
operations.

Mcf: One thousand cubic feet.



Natural Gas



MMcf: One million cubic feet.



Bcf: One billion cubic feet.

Gas Condensate Well: A gas well that
produces from a gas reservoir containing



Natural Gas: A mixture of hydrocarbon
compounds and small quantities of various
nonhydrocarbons existing in the gaseous
phase or in solution with crude oil in natural
underground reservoirs at reservoir



conditions. The principal inydrocarbons
usually contained in the mixture are
methane, ethane, propane, butane, and
pentanes. Typical nonhydrocarbon gases
that may be present in reservoir natural gas
are carbon dioxide, helium, hydrogen
sulfide, and nitrogen. Under reservoir
conditions, natural gas and the liquefiable
portions occur either in a single gaseous
phase in the reservoir or in solution with
crude oil, and are not distinguishable at the
time as separate substances.

Natural Gas-Associated-Dissolved:

The combined volume of natural gas that
occurs in crude oil reservoirs either as
free gas (associated) or as gas in
solution with crude oil (dissolved).

Natural Gas-Dry: The actual or
calculated volumes of natural gas that
remain after the liquefiable hydrocarbon
portion has been removed from the gas
stream (e.g., gas after lease, field,
and/or plant separation), and any
volumes of nonhydrocarbon gases have
been removed where they occur in
sufficient quantity to render the gas
unmarketable.



Natural Gas-Nonassociated: Natural
gas not in contact with significant
quantities of crude oil in a reservoir.

Natural Gas- Wet After Lease
Separation: The volume of natural gas
remaining after removal of lease
condensate in lease and/or field
separation facilities, if any, and after
exclusion of nonhydrocarbon gases
where they occur in sufficient quantity to
render the gas unmarketable. Natural
gas liquids may be recovered from
volumes of natural gas, wet after lease
separation, at natural gas processing
plants.

Natural Gas Liquids: Those hydrocarbons
in natural gas that are separated from the
gas through the processes of absorption,
condensation, adsorption, or other methods
in gas processing or cycling plants.
Generally, such liquids consist of propane
and heavier hydrocarbons and are
commonly referred to as condensate,
natural gasoline, or liquefied petroleum
gases. Where hydrocarbon components
lighter than propane are recovered as
liquids, these components are included with


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