NorthWestern Energy seeks to accelerate timeline for construction of plant in Montana

NorthWestern Energy said Tuesday it plans to withdraw its application for approval for new capacity resources with the Montana Public Service Commission (PSC) to accelerate the construction of the 175-megawatt Laurel Generating Station natural gas plant.

NorthWestern Energy filed a motion with the Montana Public Service Commission to suspend the docket timeline for the approval for capacity resources filed in the spring of 2021. The company intends to withdraw the application for approval of the Laurel Generating Station and instead anticipates seeking a review and recovery of the asset through a general rate filing after completion.

The timely availability of critical components and escalating labor and construction costs due to the COVID-19 pandemic are two chief reasons why the company made the decision in advance of the timeline established by the Montana PSC approval docket.

“NorthWestern Energy negotiated a very favorable price for the plant construction, however the worldwide pandemic caused supply-chain disruptions and contributed to labor shortages across all industries, including the energy sector, that were not fully anticipated during contract negotiations,” NorthWestern Energy CEO Bob Rowe said. “In addition, energy market conditions continue to trend unfavorably for our Montana customers, with very high market prices, such as those experienced in July, during periods of high regional energy demand.”

NorthWestern Energy said it made the difficult decision to proceed without prior commission review in order to accelerate the commercial operation date of the Laurel Generating Station and to take full advantage of the favorable supply and labor prices in existing contracts. The accelerated timeline should allow the Laurel Generating Station plant to serve Montana customers even earlier than otherwise thought, likely the 2023-2024 winter season.

“Montana Public Service Commission review before a large investment in a major supply resource benefits customers and the company by ensuring that the Commission agrees with the company’s approach to meeting its responsibilities to its customers. Our decision to withdraw the approval application is based on the immediate need for flexibility due to unanticipated conditions in the construction market,” NorthWestern Energy General Counsel and Vice President of Regulatory and Federal Government Affairs Heather Grahame said. “We sincerely appreciate the Montana Public Service Commission’s professional and timely management of this important case.”

The Laurel Generating Station will be part of a portfolio that is dominated by hydro and wind, with smaller amounts of coal and natural gas, and several hundred megawatts of solar anticipated over the next several years.