The University of Montana’s business research department toured the state for its mid-year economic update, which was sponsored in part by the state's largest electric utility, Northwestern Energy, and mining company SIbanye-Stillwater.
The economic updates started in Billings, where Patrick Barkey with the Bureau of Business and Economic Research highlighted wage growth and a drop in inflation for industries like finance and construction, but also pointed to tight labor markets and the condition of Montana’s treasury.
“General revenue's flat in Helena at a time when economic growth is pretty strong,” he said. “We're starting to see fragile global growth and that's affecting some of our commodity businesses. Could be affecting agriculture, although it has special circumstances. And we have the situation where the cities are doing well, and particularly eastern Montana [is] definitely not participating in the party,” said Barkey.
Bureau of Business and Economic Research data show Gallatin and Yellowstone counties leading wage growth in 2022, while more rural counties like Fergus in the central part of the state and Hill along the Hi-Line saw close to zero growth, and Richland County in the far east was in the negative.
“Richland, the oil patch, has not recovered,” said Barkey. “In fact, they’ve had more body blows with the closure of their sugar beet refinery.”
During the summer tour, BBER also presented some of the emerging and existing challenges the bureau found affect Montana’s electric grid.
Barkey said environmental pressures in the western U.S. like drought can create unpredictability in a state that uses a lot of hydroelectric generation like Montana.
“Summer is a peak time for the electric grid, and it's not a peak time for water flow. Everybody knows that. I mean, it's planned accordingly. But when drought affects that more than we expect, it can be an issue,” Barkey said.
Data show over a 10-year period coal generation kicked in about 76 percent of the time during peak demand, followed by hydropower closer to 50%.
Barkey said coal generation retirements and a growing customer base could potentially change up Montana’s historical trends. He said Montana is on track to switch from being a power exporter to an importer, with finite room on existing infrastructure lines to carry electricity.
“So, on those days when we need power, we're sometimes forced to ship it over some very creaky roads,” said Barkey.
BBER collected data that show some of Montana’s transmission lines are stressed anywhere from approximately 5 percent to 37 percent of the time where the regional average is less than 7 percent.
BBER visited cities across Montana for its midyear tour August 1 - 3 starting with Billings and ending in Kalispell.
