Butte, MT (Oct. 29, 2020) – NorthWestern Corporation d/b/a NorthWestern Energy (Nasdaq: NWE) – After evaluating recent Montana regulatory decisions regarding Colstrip, NorthWestern Energy has agreed with Puget Sound Energy to terminate the transaction to buy 92.5 megawatts of capacity generation at Colstrip Unit 4 and an additional interest in the Colstrip Transmission System from Puget.
The sale required approval from the Montana Public Service Commission and the Washington Utilities and Transportation Commission. This month the WUTC’s staff criticized the agreement, suggesting it provided too much value to Montana customers at the expense of Puget’s Washington customers, substantially reducing the likelihood the WUTC would approve the sale.
“This is a huge loss for Montana and our customers,” said NorthWestern Energy Vice President Energy Supply and Montana Government Affairs John Hines. “We pursued this agreement because it provided a way to immediately address some of our critical capacity shortage at a very low cost. In addition, it created a reserve fund to address the environmental costs for NorthWestern Energy’s existing share of Colstrip Unit 4, which would have benefited our Montana customers. The environmental responsibilities for the purchased share of Colstrip Unit 4 remained with the seller. And it gave us the opportunity to add transmission assets to import and export energy to and from Montana.
“It is disappointing that policies enacted by the Washington legislature are controlling Montana’s natural resources and our ability to reliably and cost-effectively serve our Montana customers. It is also disappointing that decisions by the Montana Public Service Commission have been so unsupportive of this vital generation.”
“The WUTC staff was critical of the agreement for NorthWestern Energy to sell Colstrip Unit 4 power back to Puget Sound Energy, noting that they were very uncomfortable with the risk to Puget’s customers of 45 megawatts of power sales tied to market prices,” said Hines. “Meanwhile, parties provided testimony to the Montana Public Service Commission advocating putting Montana customers in that risky position. Unfortunately, with the end of this transaction, NorthWestern Energy’s customers require about 365 megawatts of capacity purchases to serve peak demand from a market that is shrinking, with no price ceiling. One only needs to look at the blackouts in California this past summer to appreciate the significance of the need for capacity resources. It is no longer hypothetical, capacity shortages are real.”
Recent Washington policies are contributing to the closure of thermal generation in the Pacific Northwest and growing shortages of capacity resources when energy demand is high. NorthWestern Energy’s Montana portfolio is far short of the capacity resources needed to meet our customers’ peak energy demands, which makes the decreasing availability across the West a threat to reliable and affordable service.
NorthWestern Energy has requested proposals for 280 megawatts of capacity to begin serving Montana customers in 2023. The now abandoned purchase of Puget Sound Energy’s share of Colstrip Unit 4 creates a greater urgency on NorthWestern Energy to secure all of the capacity solicited in the request for proposals.
Source: NorthWestern Energy