Four years ago, NorthWestern Energy asked its Montana customers to shoulder a roughly $60-per-year increase on their utility bills. The request was tied to a seven-month outage at Colstrip Unit 4, and NorthWestern hoped to recoup from ratepayers the more than $8 million it had spent on replacement power. The Montana Public Service Commission ultimately denied that request in May 2016, prompting NorthWestern to file suit.
On July 30, Yellowstone County District Judge Rod Souza sided with the PSC in a decision that could influence how NorthWestern is able to deal with the latest round of Colstrip troubles.
Those troubles began in late June when Colstrip, which is operated by Talen Energy, was shut down due to unsafe levels of hazardous air pollutants being emitted from units 3 and 4. The public learned of the outage only in late July when the Billings Gazette received a leaked email written by plant manager Neil Dennehy. NorthWestern spokesman Butch Larcombe says the plant is making progress in addressing the problem, but “it’s not there yet.” Meanwhile, NorthWestern customers are getting power from elsewhere in the utility’s portfolio, as well as power purchased on the open market.
When it comes to who will end up bearing the costs of the current outage, Mike Scott with the Sierra Club in Billings believes the PSC and, in light of last week’s ruling, the Montana courts have sent a clear message to NorthWestern and its customers.
“Ratepayers should take some comfort in what the commission and the courts just did, because they are clearly providing some oversight and making good decisions about what ratepayers are actually responsible for,” Scott says.
Jenny Harbine, an attorney with the nonprofit Earthjustice who represented several parties in the NorthWestern suit, takes her assessment a step further. Judge Souza agreed with the PSC that NorthWestern acted imprudently by not evaluating the availability of outage insurance prior to the 2013 shutdown and by not exercising more oversight of the plant’s management. If the current problems at Unit 4 require significant investment to fix, Harbine contends that it’s doubtful utility commissions in Montana, Washington and Oregon will see that investment as prudent, particularly since two of Colstrip’s owners will be legally barred from delivering coal-fired power by 2035.
“That certainly changes the math on the cost-benefit of making additional investments in the plant,” Harbine says. “It could be that this plant is at a turning point. … We’re still waiting for the information to trickle in to learn just how significant this turning point is.”
NorthWestern could still ask ratepayers to foot the bill for Colstrip’s investments, or for the replacement power that NorthWestern is currently purchasing. Whether the PSC will approve such a request is another question. As for Souza’s decision, Larcombe says the utility is considering an appeal but has yet to make a decision. Either way, NorthWestern disagrees with the ruling.
“We think the costs of that replacement power are legitimate and should be allowable under Montana rules and regulations,” Larcombe says.