NorthWestern Energy’s plans for the battery storage facility in Billings have short circuited, at least temporarily, now that a law allowing the utility to bill customers ahead of actually building the facility has been declared unconstitutional.
The Montana Public Service Commission on Tuesday formally dismissed the monopoly utility’s request for preapproval to put customers on a long-term debt schedule for the 50-megawatt facility at a price determined before all costs associated with the project are known.
Battery storage is a relatively new tool for banking low-cost energy for later use or sale when prices are high. NorthWestern included batteries as part of a 2021 acquisition plan for new generation that also included a 175-megawatt natural gas plant and 100 megawatts of hydro power purchased from British Columbia. Only the battery project was before state utility regulators for preapproval.
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In May, state District Court Judge Jason Marks ruled that preapproval, a practice only granted to NorthWestern Energy, was unconstitutional. The utility’s application for the battery storage facility preceded the court ruling by six months but had yet to receive a commission ruling.
“We again find ourselves confronted by that pesky dang thing called the law here,” said Commissioner Brad Johnson. “It's on that basis that I move to dismiss NorthWestern’s application, because the application was indeed filed under Montana Code Annotated 69-8-421, which the court in fact has found unconstitutional.”
Although NorthWestern indicated that it would suffer harm if its application was dismissed, the PSC staff reported it could find no evidence that was the case. NorthWestern is free to carry out its battery storage project and then reapply once all costs are realized.
For years, preapproval has been a powerful tool available only to NorthWestern for managing risk. The practice assured the utility was guaranteed, in advance of buying or building generating assets, that it would recover its estimated costs, with interest.
But for consumers, the practice raised the risk of being locked into paying a price that turned out to be much higher than a project’s true value, which has happened. In 2014, commissioners committed NorthWestern customers to a $900 million price in advance of the utility’s purchase of a dozen hydroelectric dams. Driving up the price was the assumption that future carbon regulations would contribute to higher prices starting in 2021. Those carbon-related costs never materialized, but remain part of the debt customers pay.
Arguing for plaintiffs 350 Montana in the preapproval case, attorney Monica Tranel called the special privilege a blank check for NorthWestern, one that encouraged the utility to set prices high enough to cover potential costs that may not turn up. Tranel is currently running for Western Montana’s U.S. House seat as a Democrat.
Before the vote, Commissioner Jim Brown asked if NorthWestern intended to appeal the Marks ruling to the Montana Supreme Court and whether NorthWestern had asked the Supreme Court to stay the ruling.
NorthWestern Attorney Shannon Heim explained to Brown that on matters concerning the state constitution, the state Supreme Court won’t issue stays.
“My understanding is because it's a constitutional issue, a stay is not strictly appropriate and so a stay has not been sought,” Heim said. “And I don't believe it would be granted if it was.”
Brown is currently a candidate for Supreme Court, challenging Justice Ingrid Gustafson.
Battery storage is a relatively new tool for banking low cost energy for later use or sale when prices are high.
Tom Lutey
Agriculture and Politics Reporter
Politics and agriculture reporter for The Billings Gazette.
