Northwestern Energy CEO Bob Rowe speaks at the centennial celebration of the Holter Dam

Northwestern Energy CEO Bob Rowe speaks at the centennial celebration of the Holter Dam in July 2018. NWE purchased Holter and 10 other Montana hydropower dams from PPL in 2014.

The two-hour public meeting on NorthWestern Energy's latest energy resource plan drew a standing-room-only crowd to Billings Public Library on Jan. 2. But most of the dozens of people who spoke didn't talk as much about what's in the plan as what's not.

The majority of the 150 or so people attending were Billings area NorthWestern Energy electricity customers concerned about higher power bills and the lack of wind and solar resources in the plan.

More than a few folks at the meeting were there to support continued and increased investment in the Colstrip coal-fired power plant. The resource plan NWE submitted to the PSC last August calls for building several new gas-fired plants; it does not include adding coal-fired generation.

More coal power

However, on Dec. 10, the day after the first public meetings on the plan in Helena, NWE announced that it will increase its ownership stake in Colstrip Unit 4 by purchasing Puget Sound Energy's 25% share for $1. That transaction would bring NWE's ownership to 55% of Unit 4. NorthWestern Energy said it will file a request with the Public Service Commission this month to have its latest Colstrip acquisition added to the rate base is built into charges paid by its 370,000 Montana electric customers.

It's a curious turn of events. The South Dakota-based utility lobbied the 2019 Montana Legislature to pass a bill that would allow NWE to acquire additional Colstrip ownership from an undisclosed co-owner and add it to the rate base without the usual PSC regulation required by Montana law. The legislation ultimately failed.

Then in August NWE filed the resource plan with no additional coal-fired power proposed. Under Montana law, such a resource plan is supposed to be filed by the utility every two years and approved by the PSC, but NorthWestern hasn't actually had a resource plan approved since 2015. Questions raised by the PSC about the plan filed in 2015 were never answered, according to PSC staff. The PSC concerns with the 2015 plan included that it "did not sufficiently consider multiple sources of uncertainty that customers face, including uncertainties surrounding resource costs, capacity contributions, load forecasts, net energy metering, market price forecasts and the development of a regional market."

The plan filed in August fails to adequately address the future of NWE's stake in Colstrip Unit 4, which Montana customers are paying for right now and for decades to come, even though the plant is likely to shut down in five or six years. The other co-owners have committed to being ready to cease getting power from Colstrip by 2025, leaving open questions of who pays for shutdown, coal ash pond clean up and other pollution mitigation.

Dams sales pitch

In 2014, when NWE was pitching its $900 million purchase of 11 hydroelectric dams, the company declined PPL Montana's offer to make the Colstrip plant part of the deal. As The Gazette and other Montana newspapers reported at the time, NorthWestern attached a negative value to the Colstrip plants, worried that any buyer eventually would have to shut down the plants and bear the cost of remediating the sites. NorthWestern initially bid $740 million for the dams and only $400 million if it also had to take the coal-fired generation PPL owned (half of Units 1 and 2 and 30% of Unit 3).

Public documents filed to support the plan for adding the dams to the rate base estimated that they would provide 38% of the power needed to supply Montana customers, lowering the amount of the supply to be purchased on the open market to 10%. 

The chief financial officer for NWE told a Gazette reporter in 2014 that the company considered the coal-fired plants a liability because of expected future regulation of greenhouse gases. The CFO also said that the coal-fired plants would give NWE more power than needed for its Montana customers.

NorthWestern was correct about coming restrictions on greenhouse gases. The states of Oregon and Washington have enacted laws requiring the electric utilities they regulate to shift their supplies to energy generated without burning coal. As a result, all but one of the regulated utilities that co-own Colstrip have filed public plans to be ready to exit the coal plants in as little as five to seven years. The exception is NorthWestern Energy, which now proposes to taking a larger stake in Unit 4 and pass a larger share of operating, maintenance and cleanup costs on to its Montana customers.

Is that a good deal for NWE's Montana ratepayers?

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