Two-and-a-half years after NorthWestern Energy announced plans to increase its share of Montana’s largest power plant, Montana’s biggest utility has released more information about the operation and maintenance costs that will accompany the acquisition.
NorthWestern wrote in an Aug. 29 filing that assuming Washington-based utility Avista’s share of the 40-year-old coal-fired power plant in Colstrip will cost the company about $18 million in operation and maintenance expenses annually. Avista must pull out of the plant by the end of this year to comply with climate laws Washington legislators passed in 2019.
In 2023, NorthWestern told energy industry professionals and policymakers that the larger ownership share would help the company in a “critical” endeavor: ensuring that Colstrip, which is currently jointly owned by six utilities, remains open to protect “sufficient, adequate power in Montana.” The utility also said the “purchase price is zero” for the acquisition and pledged that rates “will not go up” for its approximately 410,0000 electricity customers as a result of the transaction.
But in its filing before the Montana Public Service Commission, NorthWestern described the operation and maintenance costs as creating a “significant financial obligation for NorthWestern.”
To meet that obligation, the state’s largest utility is pitching its elected regulators on a novel accounting structure, one that deviates from the established framework dictating how power purchases from — and sales to — other companies are handled. NorthWestern’s proposal is predicated upon contracts for approximately 58 megawatts of power the utility has signed with Big Horn County Electric Cooperative and Energy Keepers, the Confederated Salish and Kootenai Tribes-owned company that operates a hydroelectric dam on Flathead Lake.
NorthWestern is asking its regulators to funnel the full Colstrip-enabled electricity sales outlined in those contracts back to the company. This is a departure from the traditional accounting framework whereby power sales to other utilities are treated as a type of “credit” that lowers its ratepayers’ bills.
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In exchange for pulling those bill credits from its customers, NorthWestern said it will use the aforementioned contracts to cover the estimated $18 million operation and maintenance costs for the increased ownership share and the fuel — coal — costs necessary to meet the contract terms.
If the power sales outlined in NorthWestern’s contracts with Energy Keepers and the Big Horn Co-op generate less than $18 million, NorthWestern said the company, not its customers, will cover the shortfall.
In its filing, NorthWestern described the proposal as a “fair and equitable” solution for its customers, who it said will benefit from some of the additional generation capacity made possible by the Colstrip share expansion. It also pointed out that it will temporarily circumvent the need for “an immediate filing of a general rate review,” the multi-year process where regulators review a utility’s books and ensure its rates are “just and reasonable.” The PSC is in the midst of one such review. Commissioners and PSC staff are currently considering NorthWestern’s request to collect an additional $193 million from its electricity and natural gas customers annually. They are expected to issue a decision in late November.
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NorthWestern Energy announces deal to acquire larger share of Colstrip power plant
NorthWestern Energy announced that it will acquire a large share of the Colstrip power plant from Puget Sound Energy, a Washington-based utility facing a mandate to stop using coal-generated power by 2025.
NorthWestern Energy to increase ownership share in Colstrip
NorthWestern Energy said Monday it will acquire Washington-based utility Avista’s ownership stake in the aging Colstrip coal power plant, a move the company said would keep the plant in operation through the end of the decade.
Montana Free Press asked NorthWestern if it is pursuing a similar arrangement for the Colstrip shares that Puget Sound Energy, another Washington utility, is transferring to NorthWestern. A spokesperson for NorthWestern, which is courting several power-hungry data centers that will double its electricity demand, wrote in an email to MTFP that it is pursuing similar contracts for some of the 370 megawatts of power Puget Sound is transferring over on Jan. 1. It did not provide information on the financial terms of its agreements with the Big Horn Co-op or Energy Keepers, saying the contract terms are confidential.
The company wrote in its email to MTFP that it anticipates the commission will approve its request.
PSC Executive Director Alana Lake wrote in an email to MTFP that the commission is currently considering NorthWestern’s request and “will issue its decision once the evidentiary record is complete.” Lake also noted that the PSC is wading into the utility’s ability to meet current and forecasted demand with available generation sources.
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