by Keila Szpaller, Washington State Standard
August 4, 2024
NorthWestern Energy announced this week it plans to acquire more shares of the coal-fired plant at Colstrip — at no cost.
The utility said the acquisition will help leverage existing and reliable infrastructure, and its announcement came with support from Gov. Greg Gianforte, who touted the step as an investment in “Montana-made energy.”
“Working with our partners, we’ve defended our all-of-the-above energy strategy to increase access to affordable, reliable energy for all Montana consumers,” Gianforte said in a statement from NorthWestern. “I thank NorthWestern for their continued investment in our state and in the community of Colstrip.”
But the move to bring on coal is one no other utility in the nation appears to be making, according to NorthWestern’s own executives. And Montana groups that advocate for reliable, clean and affordable energy said the acquisition will put customers at risk.
“NorthWestern continues to shake down captive customers for more and more money, building and acquiring the most expensive energy plants, including an aging, costly facility like we see in Colstrip,” said Edward Barta, of the Northern Plains Resource Council, in a statement.
The Montana Public Service Commission regulates monopoly utilities in the state, but the acquisition does not require its approval. However, the PSC will review related rate requests from NorthWestern in the future.
Thursday, PSC Executive Director David Sanders said he had spoken with each of the commissioners about the announcement from NorthWestern.
“They are all reserving judgment until all of the details are known and all of the facts are in,” Sanders said.
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NorthWestern already owns a portion of Colstrip, and it said the new acquisition from Puget Sound Energy, effective on Jan. 1, 2026, will give it 55% ownership of the plant.
“More resources that can generate power on-demand, 24/7, located in Montana and dedicated to serve Montanans, are needed to meet our responsibility to provide our customers with reliable energy service, keep them safe in all weather conditions and avoid an energy crisis,” said NorthWestern President and CEO Brian Bird in a statement.
Six companies currently share ownership of Colstrip’s units 3 and 4 (units 1 and 2 were retired in 2020). The deal with Puget Sound will bring NorthWestern another 370 megawatts, the utility said.
NorthWestern earlier announced it was acquiring all 222 megawatts from Avista, also effective on Jan. 1, 2026, and also at no direct cost.
In January 2023, Bird admitted he was probably the only CEO adding coal to his portfolio. Avista, on the other hand, said in a discussion about risk factors in a 2023 federal filing that coal generation might become “obsolete” through regulatory action or legislation.
On a webpage about Colstrip, NorthWestern said both Avista and Puget Sound Energy “will retain their obligation for their portion of environmental and decommissioning costs associated with the future closure of the plant.”
Puget Sound Energy said this week the transfer of shares was “part of its pathway to complying with Washington State’s Clean Energy Transformation Act,” which calls for removing coal from serving customers in the state by the end of 2025.
“PSE customers want clean energy, and we are committed to providing it as we plan for our future in accordance with Washington state law,” said Ron Roberts, senior vice president of energy resources for Puget Sound Energy in a statement. “We are happy to find a partner in NorthWestern and for the future of the Colstrip plant to be in Montana’s control.”
Puget Sound retains its ownership rights to the Colstrip transmission system, however. In the news release about its decision to unload its shares of the coal fired plant, it said it continues to invest “in the diverse energy resources of Montana,” including three different wind farms.
NorthWestern compared its new acquisition of the Colstrip shares — 370 megawatts — to an equivalent natural gas plant, which it estimated would cost “more than $700 million to build” and not be available for five years. It also said majority ownership in Colstrip would benefit its ability to guide investments in the plant “until viable, equivalent, carbon-free energy resources are commercially available.”
NorthWestern is building a methane-fired plant in Laurel to generate 175 megawatts. It was estimated to cost $250 million in the fall of 2021 and is now projected to cost roughly $310-320 million.
On its webpage about Colstrip, NorthWestern also said the plant is a “bridge” to a “cleaner energy future.” It said energy demand in Montana is growing, and the additional megawatts will help meet it.
“We are in discussions with several large customers seeking dependable, established and consistent energy,” the company said. “This additional portion of the Colstrip Plant will not only allow us to reliably serve our current customers into the future, but it will also allow us to support economic development and load growth in Montana.”
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Montana groups that advocate for renewable, reliable and affordable energy immediately opposed the deal between NorthWestern and Puget Sound and said it will be costly for customers.
“If this was a private company, the Board of Directors would likely fire the entire executive team for putting shareholders at such great risk,” said the Montana Environmental Information Center’s Anne Hedges in a statement.
MEIC, a conservation nonprofit with a focus on energy, said the Colstrip plant is not only unreliable, operating only “half the time when Montana needs the power,” it said the deal will also “cause energy rates to skyrocket.”
Customers already have faced significant increases in electric rates requested by NorthWestern and approved by the Public Service Commission.
MEIC said the annual cost of coal for NorthWestern’s ownership in the Colstrip plant would be $132 million, “increasing nearly four-fold from current costs,” extrapolated from recent data. MEIC also estimated the plant needs $2 billion in upgrades.
A 2023 report from Energy Innovation Policy and Technology, a nonpartisan research group based in San Francisco, said the cost of running coal plants keeps rising, but the cost of wind and solar keeps falling. It estimated 99% of all coal plants in the U.S. were more expensive than local solar, wind or energy storage.
Barta of the Northern Plains Resource Council criticized the deal as well and said it will harm customers.
“Why would NorthWestern take on a resource that another corporation clearly sees as a financial liability?” Barta said. “Because NorthWestern knows that ratepayers foot the bill for these fiscally irresponsible purchases while corporate executives and shareholders enjoy all the profits.
“The coziness between this corporation and the state officials who enable these consumer abuses continues to harm working Montanans.”
In announcing the earlier agreement with Avista, Bird credited Gianforte with helping kick off the deal at the Governor’s Cup Golf Tournament. Gianforte said he was pleased to help bring the parties together but said Bird should receive the credit.
Thursday, the Montana Consumer Counsel could not be reached for comment in time for this story.
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