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Gazette opinion: What will Colstrip 4 cost NWE ratepayers?

Gazette opinion: What will Colstrip 4 cost NWE ratepayers?


Fans of solar energy celebrated last week in Helena after the Public Service Commission rejected a utility's plan that would have priced most Montanans out of the residential solar panel market.

PSC members expressed a healthy skepticism about NorthWestern Energy's proposal and unanimously opposed the utility's proposed cost increase for new solar units that allow customers to generate some of their own power and sell the excess back to NWE.

This decision is welcome for the small Montana businesses that sell and install solar panels, for the 2,100 or so NWE customers who net meter now and those who will want to add solar panels to their homes in the future. But the five-member, all-Republican PSC has many other, much larger decisions that require urgent attention. As Montana's largest monopoly utility, NorthWestern provides electricity to 370,000 Montana customers.

As previously reported by The Gazette's Tom Lutey, commissioners voted Oct. 30 to increase NorthWestern rates $6.5 million across several classes, but left the solar rooftop/net metering issue unresolved until Nov. 25.

Also on Nov. 25, the PSC added the six-turbine Two Dot wind farm to NorthWestern’s rate base, meaning customers will now, over time, pay for utility’s $18.5 million purchase of the wind farm as well as maintenance and operations costs.

A larger issue is paying for NorthWestern's 30% share of Colstrip Unit 4, which a previous PSC put into the rate base in at $407 million in 2008 (one year after NWE actually paid $186 million for it). Ratepayers currently remain on the hook for $300 million of that cost, having paid off the first $100 million with interest at 8.24%.

That debt assigned to NWE Montana customers is scheduled to be paid off by 2042, the year that NWE says it plans to retire its interest in Colstrip Unit 4.

The other Unit 4 co-owners (all utilities regulated in Oregon or Washington) are committed to being ready to cease operating by 2025.

NorthWestern Energy cannot operate 30% of Unit 4 if the owners of the other 70% pull out. NorthWestern must make a plan to be out of Unit 4 by the same time as the other utilities, and the Montana Public Service Commission must demand to see such a plan soon — within weeks or months, not years.

Consider what any attempt for NWE to go it alone on Unit 4 would mean in costs. It would be responsible for 100% of costs of plant operations, maintenance, repairs, breakdowns, shutdowns, pollution violations and coal supply.

What are these costs? Some were revealed in Washington utilities commission filings reported Nov. 27 in The Gazette by Lutey:

  • NorthWestern has sought to bill Montana customers for $42 million of Unit 4 capital expenses that have been building up since 2008, according to the PSC, which last week refused to let NWE pass on the costs to Montana ratepayers.
  • An estimated $20 million in needed repairs to Colstrip Power Plant Unit 4 because the super-heated portion of the boiler is showing signs of metallurgical wear and degradation, regulatory analysts reported.
  • Puget Sound Energy, one Unit 4 co-owner, already expects the cost of coal to increase considerably under a new contract. The new price for coal is still unknown. The current contract with neighboring Rosebud Mine expires at the end of the year.
  • An agreement reached by Spokane-based Avista Corp last week would prevent that co-owner from making any capital expense at Colstrip that would keep the power plant operating beyond 2025.

Asked last week if NorthWestern would consider buying a larger share of Colstrip, the utility's spokesperson didn't answer the Gazette reporter's question. The South Dakota-based utility has indicated previously that it will issue a request for proposal for new generation next month. 

It's time for NorthWestern Energy to realistically address the future of Colstrip and its Montana power generation supply. It's time for the Montana Public Service Commission to do its job: Hold this monopoly utility accountable.


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