The Montana Public Service Commission (“PSC” or “Commission”) has issued a Notice of Ex- tended Opportunity to Comment (“NEOC”) that asks a series of questions about Earth Justice and its fellow petitioners’ (“Petitioners”) petition for rulemaking (“Petition”). Among other is- sues, the Commission’s additional questions focus on potential issues with using the social cost of greenhouse gases (“SCC”) in the Commission’s ratemaking proceedings, as well as queries over how to select the appropriate discount rate. The NEOC also asks for feedback on several potential legal obstacles to the Commission adopting the Petition.
In its initial comment, the Center for Environmental Accountability (“CEA”) raised concerns with the Petition that mirror the concerns the PSC raises in the NEOC. CEA argued that Held v. State does not compel the PSC to adopt the Petition, that Montana law and PSC practice are al- ready consistent with the Montana Constitution’s concern for the environment, and that the SCC has inherent methodological flaws that mean any choice in value is inevitably more a reflection of the political beliefs of its creators than an objective assessment of the harms of emitting green- house gases.
As CEA’s comment explained, the flawed SCC methodology urged on the PSC by Petitioners is transparently political. Petitioners’ proposed SCC figures rely on a fundamentally flawed emis- sion scenario, RCP8.5, in a way that dramatically increases long-term projections of damage from climate change. These damages are then further inflated by the choice of an artificially low “discount rate”—a number used to account for the difference between the present and future value of money—that can be more accurately characterized as a political statement than any sort of scientifically objective number. The concatenation of these errors led CEA to conclude “that it is impossible to use the SCC to represent the costs of current carbon emissions.”
Recent public discourse has only strengthened that conclusion. In May 2024, economists Adrien Bilal and Diego Känzig released a study claiming to identify a SCC of $1,056 per ton of carbon dioxide—more than five times the value urged by Petitioners. This proved to be a bridge too far for many, and in the online debate that ensued, several prominent climate economists admitted that the SCC is the product of politics, not science.
This second comment discusses these recent developments and responds to several of the PSC’s additional questions. CEA’s conclusion has not changed from its first comment. Given the significant methodological flaws with the SCC, the Petition would result in rates that are neither just nor reasonable, and would result in Montana ratepayers footing the bill for fictitious global bene- fits. Montana law does not permit that result.
Comments on the Notice of Extended Opportunity to Comment
I. Introduction
The Montana Public Service Commission (“PSC” or “Commission”) has issued a Notice of Ex- tended Opportunity to Comment (“NEOC”) that asks a series of questions about Earth Justice and its fellow petitioners’ (“Petitioners”) petition for rulemaking (“Petition”). Among other is- sues, the Commission’s additional questions focus on potential issues with using the social cost of greenhouse gases (“SCC”) in the Commission’s ratemaking proceedings, as well as queries over how to select the appropriate discount rate. The NEOC also asks for feedback on several potential legal obstacles to the Commission adopting the Petition.
In its initial comment, the Center for Environmental Accountability (“CEA”) raised concerns with the Petition that mirror the concerns the PSC raises in the NEOC. CEA argued that Held v. State does not compel the PSC to adopt the Petition, that Montana law and PSC practice are al- ready consistent with the Montana Constitution’s concern for the environment, and that the SCC has inherent methodological flaws that mean any choice in value is inevitably more a reflection of the political beliefs of its creators than an objective assessment of the harms of emitting green- house gases.
As CEA’s comment explained, the flawed SCC methodology urged on the PSC by Petitioners is transparently political. Petitioners’ proposed SCC figures rely on a fundamentally flawed emis- sion scenario, RCP8.5, in a way that dramatically increases long-term projections of damage from climate change. These damages are then further inflated by the choice of an artificially low “discount rate”—a number used to account for the difference between the present and future value of money—that can be more accurately characterized as a political statement than any sort of scientifically objective number. The concatenation of these errors led CEA to conclude “that it is impossible to use the SCC to represent the costs of current carbon emissions.”
Recent public discourse has only strengthened that conclusion. In May 2024, economists Adrien Bilal and Diego Känzig released a study claiming to identify a SCC of $1,056 per ton of carbon dioxide—more than five times the value urged by Petitioners. This proved to be a bridge too far for many, and in the online debate that ensued, several prominent climate economists admitted that the SCC is the product of politics, not science.
This second comment discusses these recent developments and responds to several of the PSC’s additional questions. CEA’s conclusion has not changed from its first comment. Given the significant methodological flaws with the SCC, the Petition would result in rates that are neither just nor reasonable, and would result in Montana ratepayers footing the bill for fictitious global bene- fits. Montana law does not permit that result.