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NW Energy may get only half of Colstrip acquisition

Plant operator Talen seeks portion of power
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Posted at 12:45 PM, Apr 13, 2020
and last updated 2020-04-13 14:45:12-04

NorthWestern Energy’s plans to acquire a new, 185-megawatt chunk of coal-fired power from the Colstrip 4 plant apparently will be scaled back, as another player wants in on the deal: Talen Energy, the operator of the Colstrip plants.

NorthWestern revealed late Friday that Talen is exercising its contractual rights to obtain a portion of the power that NorthWestern has arranged to buy from Puget Sound Energy.

Puget Sound, a utility based in Bellevue, Wash., is selling its share of Colstrip for $1, in order to get rid of coal-fired power by 2025.

NorthWestern had agreed to the purchase, but now Talen says it wants to acquire part of that power at the same price. As one of the six part-owners at Colstrip, Talen has that right.

“Recent history has demonstrated that Colstrip is needed to support the Montana and greater Pacific Northwest energy markets for the foreseeable future, and our goal is to ensure this resource continues to do so for as long as economically feasible,” Talen said in a statement provided to MTN News.

Talen, based in Pennsylvania, also noted that Puget Sound wants to continue to buy power from Colstrip, regardless of the ownership, for several years, making the deal “economically attractive.”

Puget Sound, with more than 1 million customers in western Washington, owns a 25 percent share of the Colstrip 4 plant.

NorthWestern Energy already owns 30 percent of the Colstrip 4 plant and had planned to add the Puget Sound share of power to serve NorthWestern’s electric customers in Montana.

Although NorthWestern had agreed to buy the Puget Sound share for $1, NorthWestern would assume the operating costs of that share and pass on those costs to customers. That proposal is now before the Montana Public Service Commission for review and possible approval.

NorthWestern said Friday that Talen’s involvement means NorthWestern would still acquire at least 92.5 megawatts of power, or an additional 12.5 percent of the Colstrip 4 output.

NorthWestern officials have said the Colstrip power offers an affordable, reliable source of electricity for its customers – although, now, it appears part of the power will end up controlled by Talen, which can sell the power on the wholesale market.

“NorthWestern Energy and Puget Sound Energy negotiated and reached an agreement with good outcomes for both companies’ customers,” said John Hines, vice president of energy supply for NorthWestern. “Unfortunately, at the end of all that hard work by NorthWestern Energy and Puget Sound Energy, half of the value that would have gone to Montanans may be taken by an independent power producer.”
Talen said its purchase means the company can continue to focus “on Colstrip’s economic viability while helping to maintain much-needed baseload power for Montana and its surrounding markets.”
NorthWestern’s proposed acquisition of Colstrip power also has come under fire from environmental groups, who argue that cheaper, cleaner power is available.