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NorthWestern Energy will increase its share of Colstrip Power Plant in 2026 under an agreement with Spokane-based Avista Corp, the two utilities announced Monday night.
The transaction is timed with Avista’s state deadline to stop delivering coal power to its Washington customers by the end of 2025. The handoff resembles one announced last August between another Washington utility with a Colstrip stake, Puget Sound Energy, and power plant co-owner Talen Energy.
Avista’s 222-megawatt share of Colstrip is divided between the powerplant’s surviving generators, Units 3 and 4. Dan Vermillion, Avista CEO, told an audience gathered for a lobbying event at the Great Northern Hotel in Helena that the terms are still being set, but that the company will keep its environmental cleanup liability, as well as its share of the Colstrip transmission line.
“When we exit the facility, we will continue to honor our commitments to the Colstrip plant and community. The transaction recognizes our commitment to fund our share of the plant decommissioning costs,” Vermillion said.
“And we anticipate that there will be other opportunities for us to partner with parties in the state of Montana that were mentioned, the transmission will be staying with the Avista. We intend to make good use of that transition by continuing to do business in the state of Montana,” he added.
John Hines, NorthWestern Energy vice president of supply, told the room that Colstrip would remain open through the end of the decade. The end date was a break from the utility’s repeated assertion the power plant would run through 2042. NortWestern currently owns a 222 MW share of Unit 4.
“This provides a mechanism for both Units 3 and 4 to stay open through the rest of this decade, which is absolutely critical for the community, for the state, and for allowing us to have sufficient adequate power in Montana,” Hines said.
Hines drew applause from legislators in the room when he said no legislation would be a required to facilitate the share transfer. The state’s utility regulator, the Montana Public Service Commission, won’t have to act until closer to the transaction date.
The acquisition doubles the coal power in NorthWesterns Montana portfolio as pressure builds for the utility to decarbonize. Three of the Montanas largest cities, Bozeman, Helena and Missoula previously signed memorandums of understandings with NorthWestern about decarbonizing their supplied energy. Electric meters in those communities represent a third of the utilitys Montana electric customer base. All three communities want to dump fossil fuel energy by 2030.
NorthWesterns plan is to retire its four coal-fired power plants sometime in the 2040s, or as they become uneconomical, a horizon far enough away to allow the 51% increase in its coal power lineup. In a press release NorthWestern CEO Brian Bird asserted that owning more coal power would help NorthWesterns "Net-Zero by 2050" goal.
“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 Energy President and CEO Brian Bird. “This agreement addresses that risk and saves our Montana customers the significant cost of acquiring new generation. It solidifies NorthWestern Energy’s path to achieve our Net Zero Emissions by 2050 commitment, ensuring we can continue to provide reliable energy service at the most affordable rates until other technology for on-demand, clean generation is cost effective.”
There was already a debate before Monday nights Colstrip announcement about whether NorthWestern Energy needed more coal power in its portfolio. The utility intends to cut ties with the a third-party owned coal power plant known as CELP, or Colstrip Energy Limited Partnership. It told regulators last fall that CELPs 41 MW of baseload power wasnt needed, that the utility didnt need increase capacity until 2032.
In a separate regulatory state, once in which NorthWestern is seeks to recover an additional $192 million in through rates paid by Montana customers, environmentalists argue that NorthWestern wouldnt need to boost its fossil fuel power supply if it scrapped plans to retire contracts with energy providers in the next couple years.
The 135 MW Judith Gap Farms contract with NorthWestern Expires in 2026, but the project is still spinning. Theres another 160 MW of power retiring this year, as well. Analyst Michael Goggin, of Grid Strategies, tells state regulators in filed testimony that it would most affordable for NorthWestern customers if the utility extended contracts rather than continue building a 170 MW gas-fired power plant in Laurel.
"Testimony in its rate case shows that NorthWestern’s own analysis says it has plenty of energy and capacity for many years to come. But NorthWestern is more concerned about making its executives and shareholders rich off the backs of its customers,” said Anne Hedges, Director of Policy and Legislative Affairs for the Montana Environmental Information Center.
Goggins is MEICs expert witness in NorthWesterns rate case.
Hedges said Montanans should be concerned about the NorthWesterns Colstrip plans given power plants age and reliability. The power plant has experienced several extensive outages for maintenance, or pollution violations in recent years.
"Not only is this rogue company trying to increase customers electricity rates by a whopping 25%, it also wants to force its customers to pay for an old, incredibly expensive, unreliable coal plant. While virtually every other utility in the country is transitioning from coal to a modern energy system, NorthWestern is doubling down on last century’s dirty, unreliable, and unaffordable technology," Hedges said in a press release.
This is the second time a Washington utility has attempted to transfer Colstrip ownership to NorthWestern Energy. Washington utilities must stop servicing customers with coal power by Dec 31, 2025 under the Clean Energy Transformation Act. That deadline, coupled with coal power losing the affordability war to natural gas and renewable energy, has resulted in desperate deal making. Regulators in Washington have become resistant to passing on Colstrip costs to ratepayers, including $21 million stemming from a more than 70-day breakdown in summer 2018.
Puget Sound Energy attempted to transfer its 200 MW share in Unit 4 to NorthWestern in 2020 for the aggregate price of $1. That deal fell apart as concerns arose in Washington over millions of dollars that analysts said Puget customers would have to pay. Similarly, in Montana there were concerns that not enough was known about future plant-related costs to be paid, with interest, by NorthWestern ratepayers.
An Oregon ban on coal power, is pushing Colstrip owners Portland General Electric and PacifiCorp toward the exits, as well. The agreement between NorthWestern and Avista, filed Montana with the U.S. Securities Exchange Commission, hints a NorthWestern engaging in a future share transfer to obtain majority ownership of Unit 4. The only shares in the unit that arent currently part of a trade out belong to the Oregon utilities.
Colstrip owners Talen Energy and NorthWestern are poised to be the last two companies with power plant ownership.
Talen, which is currently in bankruptcy, agreed in August to acquire Pugets ownership in Colstrip Units 3 and 4. In its bankruptcy filings, Talen indicates that it plans to close the coal-fired power plants it owns outright.
A Texas-based merchant generator, Talen lead the announcement of its share trade with Puget by emphasizing plans to build a wind farm near Hysham, with Puget as a future customer. |
