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Regulators pause review of NorthWestern's Colstrip purchase plans
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Regulators pause review of NorthWestern's Colstrip purchase plans

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Regulators have hit the pause button on NorthWestern Energy’s proposed purchase of an increased share of Colstrip Unit 4.

Citing a lack of detail about how much of Unit 4 NorthWestern is buying, the Montana Public Service Commission voted unanimously to halt the preapproval process. Northwestern had set out last December to buy a 185-megawatt share of CU4 from Colstrip’s largest owner, Puget Sound Energy.

Puget wants out of the unit entirely. The Seattle-area utility faces a state coal power ban at the end of 2025, impacting not only its Unit 4 share, but a twin share in Colstrip Unit 3, as well. But Puget's sale to NorthWestern changed in April when another Colstrip shareholder, Talen Energy announced that it wanted half of what Puget was selling.

Talen eyes bigger Colstrip share

A right-of-first-refusal agreement prevented Puget from turning Talen away and the subsequent sale changed the nature of what NorthWestern was buying.

Tuesday's action was about the PSC pausing work on NorthWestern’s plan until the Talen deal was on the table so it could be determined what that meant for NorthWestern's customers in Montana. In Washington, the Utility and Transportation Commission was doing the same, halting review of Puget’s proposed sale to NorthWestern until there is an actual Talen contract.

The entire purpose of preapproving NorthWestern’s Colstrip buy was to determine whether it was a good deal and whether NorthWestern’s customers should be committed to paying future costs associated with the Puget share for years to come.

This is the one opportunity Montana regulators have to kick the tires on the Colstrip deal, said PSC staff attorney Zach Rogala. Right now, Rogala said, “We don’t even have tires to kick yet.”

Additionally, the sales case had been moving forward assuming NorthWestern was buying an additional 12.5% share of Unit 4, and that Talen's late arrival had simply cut NorthWestern's purchase in half. There were intervening parties framing questions about the sale based on what NorthWestern had originally presented.

However, the details of the sale were changing and no one had seen the new terms. Early in July, NorthWestern filed new details indicating that its purchase could be somewhere between half of what Puget was selling to all of what was originally on the table. PSC staff said it had become impossible to know what the sale meant for customers.

"Bottom line is, when it comes to the purchase sale agreement, staff is very concerned," said Gary Duncan, a PSC staff analyst noting that NorthWestern might be buying 185 megawatts of power plant capacity or half that. It was too uncertain for analysts.

“We have nothing to analyze,” said Tony O’Donnell, a commissioner from Billings. “There’s nothing for intervenors to comment on because the document doesn’t exist.”

NorthWestern told Lee Montana Newspapers that it was negotiating its shared ownership vote with Talen, as it pertained to operating decisions at the power plant. Once the vote sharing issue was settled, the details of Talen’s purchase would be submitted to regulators in Montana and Washington.

There is an expiration date to NorthWestern’s original purchase sales agreement with Puget Sound Energy. Terms of the agreement dictate that regulators in Washington and Montana sign off on the deal by the end of December, after which the terms could change.

“The acquisition must be complete by the end of December because if it is not, either party can withdraw from the agreement,” said Jo Dee Black, Northwestern spokesperson.

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