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NorthWestern Energy building $250M natural gas power plant in Laurel
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NorthWestern Energy building $250M natural gas power plant in Laurel

NorthWestern Energy intends to build a $250 million, 175-megawatt power plant in Laurel as part of a plan to add 325 megawatts of dispatchable power to its Montana portfolio.

The utility laid out plans late Tuesday for the gas-fired power plant, along with a 50-megawatt battery storage project and a five-year agreement to buy 100 megawatts of hydropower. Details were announced in a press release NorthWestern posted to Globe Newswire.

The new power plant in Laurel will be a reciprocating internal combustion engine, or RICE plant. Easily ramped up or down, RICE plants have become a popular tool for balancing generation intermittent resources like wind and solar farms. For perspective, the RICE plant’s output would be about 78% of the nameplate capacity of NorthWestern’s 30% share of Colstrip Power Plant Unit 4.

“This resource portfolio addresses a key portion of our immediate need for generation capacity while also allowing us to make progress toward our goal of an energy supply portfolio in Montana that reduces the carbon intensity of our electric generation by 90% by 2045,” Bob Rowe, NorthWestern's CEO, was quoted saying in the press release.

The Laurel Generating Station is expected to be available to serve customers by Jan. 3, 2024. 

The battery storage project is expected to come online in late 2023.

The projects announced Tuesday stem from a competitive solicitation for resources issued at the start of 2020. The utility is expected to report results of its request for proposal to the Montana Public Service Commission at month’s end. The company reports receiving proposals from 21 bidders.

NorthWestern indicates it will apply in May for PSC approval to add the RICE plant and the battery storage project to its portfolio.

The battery storage will be used to store wind energy when generation exceeds demand, so the power can be delivered when needed.

At the start of 2023, British Columbia-owned BC Hydro will supply NorthWestern with 100-megawatts of capacity through 2028.

NorthWestern has signaled a move toward gas-fired power plants for several years. In early 2019, it was telling would-be investors that it had a need for about 800 megawatts of dispatchable generation capacity. It indicated that gas-fired power plants were the preferred source for the generation and would likely be built 200 megawatts at a time.

Gas-fired power plants were also the focus of the utility's 2019 integrated resource plan. However, the day after a public hearing in which NorthWestern explained its reasons for pivoting to gas, the utility announced it intended to buy more of Colstrip Unit 4.

Puget Sound Energy and NorthWestern had entered a purchase sale agreement in which Montana's largest monopoly utility was to pay the aggregate price of $1 for Puget's 185-megawatt share of Unit 4. The two Colstrip owners chose to withdraw from the agreement after utility analysts in Washington determined that dollar deal was no bargain for consumers because of related power prices and unpaid debt.

Word of Laurel’s gas-fired power plant leaked weeks ago in the Montana Legislature as Sen. Steve Fitzpatrick, sponsor of a Colstrip bill benefitting NorthWestern, testified that there would be a gas-fired power plant in Billings. The son of NorthWestern’s former director of government affairs, was 8 miles off the mark but was in the ballpark.

Fitzpatrick’s Senate Bill 379, supported by NorthWestern, shields the utility from financial losses related to Colstrip by guaranteeing full recovery of new shares in the plant, as well as determining that only NorthWestern could decide when that was considered shut down. It set up regulator-proof terms for passing on unanticipated costs to customers.

Relevant to the 175-megawatt Laurel RICE plant, SB 379 also set up a formula to determining what customers were to pay for these new-to-NorthWestern Colstrip acquisitions. A 185-megawatt share of Unit 4 was likely to cost customers $486 million according to PSC analysts, who also offered up an alternative $238 million price that eliminated basic costs like coal for making coal power, power plant maintenance, and capital expenses.

Lawmakers were told there was no cheaper option.

“The only thing that's cheaper would be if you went down to the store and got some candles down at Safeway and burned those. That's probably cheaper. But nobody has produced anything that says that anything is cheaper than this. Replacing Colstrip is not cheaper,” Fitzpatrick told lawmakers last week.

What NorthWestern produced Tuesday was less than what PSC analysts had estimated for the Colstrip terms offered by SB 379.

NorthWestern is also a gas company with 43.1 billion cubic feet of owned reserves and retail demand of 560 million cubic feet annually in Montana, as disclosed in corporate filings. The company owns three natural gas storage fields in Montana, as well as two transmission pipelines through subsidiaries, plus connections to four other transmission systems.

The Laurel power plant is the second gas-fired power plant announced by NorthWestern in the last 12 months. The utility announced the construction of a 58-megawatt RICE plant near Huron, South Dakota in May 2020. The cost of that plant was $84 million.

There will be opposition to a gas-fired power plant. Carbon dioxide emissions from gas-fired power plants are roughly 54% of a coal plant producing the same level of energy, according to U.S. Energy Information Administration. Peaker plants, like the one NorthWestern intends to build in Laurel, have been promoted as a transition generator to an all-renewable energy future.

With the advent of battery storage, there are renewable proponents who say natural gas as a transitional energy source isn’t necessary.

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