The Institute for Energy Research is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets.

About IER

Montana

DOWNLOAD PDF

Select Economic and Energy Data Value State Rank
Real Gross Domestic Product, per capita $28,170 4th lowest
Unemployment 6.9% 8th lowest
Gasoline Price, per gallon $2.86 14th highest
Electricity Price, per kWh 7.44¢ 14th lowest

Montana has low electricity prices (25 percent lower than the national average) and relies on coal for almost 60 percent of its electricity production. Hydroelectricity contributes another third of Montana’s electricity production, while wind and petroleum provide smaller amounts of electricity.

Montana is home to more than a quarter of the country’s estimated recoverable coal reserves, as well as large deposits of oil and natural gas. Montana provides about 4 percent of the nation’s coal production and exports coal to more than 15 states. In addition, the state accounts for about 2 percent of oil production in the nation. Montana also has substantial hydroelectric potential from rivers flowing out of the Rocky Mountains and is one of the top hydroelectric producers in the country. Six of the state’s ten largest generating plants run on hydroelectric power. Montana exports large amounts of electricity to nearby states.

Regulatory Impediments to Affordable Energy

Although affordable energy is a vital component of a healthy economy, regulations frequently increase energy costs. Regulations imposed in the name of reducing carbon dioxide and greenhouse gas emissions are especially costly. Carbon dioxide is a natural byproduct of the combustion of all carbon-containing fuels, such as natural gas, petroleum, coal, wood, and other organic materials. Today, there is no cost-effective way to capture the carbon dioxide output of the combustion of these fuels, so any regulations that limit carbon dioxide emissions will either limit the use of natural gas, petroleum, and coal, or dramatically increase their prices.

Below are some facts about Montana’s regulatory environment that are likely to affect the cost of energy or the cost of using energy. Montana has thus far avoided some of the costly energy policies other states are implementing.

  • Montana does not cap greenhouse gas emissions.
  • Montana is a member of the Western Climate Initiative (WCI), a regional agreement among some American governors and Canadian premiers to target greenhouse gas reductions. The central component of this agreement is the eventual enactment of a cap-and-trade scheme to reduce greenhouse gas emissions 15 percent below 2005 levels by 2020.
    • Montana has a de facto ban on new coal-fired power plants. House Bill 25, passed in 2007, prohibits regulatory pre-approval of new coal plants that do not sequester 50 percent of carbon dioxide.[i] This is a de facto prohibition on pre-approval of all new coal-fired power plants, because such sequestration technology is not yet commercially available.
  • Montana requires utilities to sell a certain percent of electricity from renewable sources. The state’s renewable portfolio standard requires utilities to provide 15 percent of their retail electricity sales from renewable sources by 2015 and each year thereafter.[ii]
  • Montana requires gasoline to be mixed with renewable fuels. Senate Bill 293, passed in 2005, requires that all non-premium gasoline must contain 10 percent ethanol.[iii] Also, Montana requires the Missoula area to use oxygenated gasoline during the winter.[iv]
  • Montana does not impose automobile fuel economy standards similar to California’s, which include attempts to regulate greenhouse gas emissions from new vehicles.
  • Montana requires new residential and commercial buildings to be certified as energy-efficient. Residential and commercial buildings must comply with the 2003 International Energy Conservation Code (IECC). Commercial building codes must also meet ASHRAE 90.1-2001.[v] The IECC (developed by the International Code Council) and ASHRAE (developed by the American Society of Heating and Refrigeration and Air Conditioning Engineers) are model codes that mandate certain energy efficiency standards. Senate Bill 49, passed in 2009, creates energy efficiency standards for new or renovated state-owned and state-leased buildings. The energy efficiency of these buildings must exceed the 2006 IECC by “20 percent or to the extent that is cost-effective over the life of the building or major renovation.”[vi]
  • Montana does not impose state-based appliance efficiency standards.
  • Montana does not allow utilities to “decouple” revenue from the sale of electricity and natural gas. Some states decouple revenue from actual sales, allowing utilities to increase their revenue by selling less electricity and natural gas.

  • Data Sources: Real GDP per capita 2008: Bureau of Economic Analysis, News Release: GDP by State (June 2, 2009), http://www.bea.gov/newsreleases/regional/gdp_ state/gsp_newsrelease.htm; Unemployment: Bureau of Labor Statistics, Regional and State Employment and Unemployment–February 2010 (Mar. 10, 2010); Gasoline Prices: American Automobile Association, AAA Daily Fuel Gauge Report (Mar. 30, 2010); Electricity Prices: Energy Information Administration, Electric Power Monthly, Table 5.6.B., Average Retail Price of Electricity,  (March 15, 2010), http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_b.html; Electricity Generation Data: Energy Information Administration, Electricity Generation 2009, http://www.eia.doe.gov/cneaf/electricity/epa/generation_state_mon.xls.

    [i] H.B. 25 (Mont. 2007), http://data.opi.mt.gov/bills/2007/billhtml/HB0025.htm.

    [ii] Lawrence Berkeley National Laboratory, Renewables Portfolio Standards in the United States, http://eetd.lbl.gov/ea/ems/reports/lbnl-154e.pdf.

    [iii] S.B. 293 (Mont. 2005), http://data.opi.state.mt.us/bills/2005/billhtml/SB0293.htm.

    [iv] Energy Information Administration, Montana, Apr. 1, 2010, http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=MT.

    [v] Building Codes Assistance Project, Code Status: Montana, http://bcap-energy.org/node/122.

    [vi] S.B. 49 (Mont. 2009), http://data.opi.mt.gov/bills/2009/billhtml/SB0049.htm.

Back to top