NorthWestern Energy ends purchase of 92.5 MW from Colstrip Unit 4 in Montana

NorthWestern Energy has terminated an agreement to purchase 92.5 MW of capacity generation from Puget Sound Energy’s Colstrip Unit 4, citing regulatory decisions as the cause.

That sale had required approval from both the Montana Public Service Commission and the Washington Utilities and Transportation Commission (WUTC), but following criticism from WUTC staff, NorthWestern withdrew, claiming that policies enacted by the Washington legislature are controlling Montana’s natural resources. Montana did not escape blame from the company either, as NorthWestern denounced the Montana PSC as unsupportive.

“This is a huge loss for Montana and our customers,” John Hines, NorthWestern Energy vice president of Energy Supply and Montana Government Affairs, said. “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.”

The criticism from WUTC staff argued that the deal between NorthWestern and Puget Sound gave too much value to Montana customers at the expense of Puget’s Washington customers. However, with the cancellation, NorthWestern is left to find about 365 MW of capacity purchases to serve peak demand. According to Hines, that market is shrinking and has no price ceiling. With its Montana portfolio unable to meet the capacity resources needed for peak energy demand, NorthWestern argued a threat to reliable and affordable service is at hand.

“It is no longer hypothetical, capacity shortages are real,” Hines said.

In response, NorthWestern is now requesting proposals for 280 MW of capacity to begin serving Montana customers in 2023.