HELENA — As NorthWestern Energy prepared to take over majority control of the Colstrip power plant, Montana utility regulators initially sought to intervene in the company’s plan to assign some of their newly acquired electricity to a new subsidiary. However, after a meeting last week, the Montana Public Service Commission has now changed its response.
(Watch the video for more on the PSC's different approach to NorthWestern's plans.)
NorthWestern currently controls 15% of the generating capacity at the coal-fired Colstrip Steam Electric Station. As of Jan. 1, they will acquire the ownership stakes of two other companies: another 15% from Avista and 25% from Puget Sound Energy.
Company leaders say they wanted to secure majority ownership so they could have greater authority over the plant’s operations and maintenance. However, they’ve argued they don’t need all the new capacity they’ve acquired to serve their existing Montana customers, so they’re placing the share they got from PSE into a new subsidiary, NorthWestern Colstrip 370Pu LLC, that they say is outside the regulatory jurisdiction of the PSC. The company plans to sell the power from that share on the wholesale market.
NorthWestern went to the Federal Energy Regulatory Commission to seek approval for their plans. Earlier this month, the PSC voted to intervene in that case. Their filing, submitted Dec. 3, called NorthWestern Colstrip a “shell corporation” and said the transfer appeared “engineered to avoid Montana regulation.”
On Friday afternoon, the PSC met for about two hours in closed session, discussing “litigation strategy” connected with the FERC filing.
“The discussion involved the identification of some discrepancies between the commission's motion to intervene in that docket and the actual filing that was submitted on our behalf by legal counsel,” PSC Vice President Jennifer Fielder said during a meeting Tuesday.
After the Friday meeting, the commission announced that it was withdrawing its intervention with FERC, and instead launching a state-level investigation into the transfer.
In a statement released by the PSC Friday, Fielder said it made sense to file an intervention when the commission was facing a short timeframe and had limited information about NorthWestern’s plans.
“I supported that action out of concern that we did not fully understand the transaction and that adequate supplies of least-cost power for Montana retail customers could be at risk,” she said. “Now that we have had the opportunity to analyze the matter more carefully, I believe these concerns have been—or can be—addressed through the state regulatory process.”
During the PSC’s meeting Tuesday, Commissioners Brad Molnar and Randy Pinocci tried to make a motion to reconsider the commission’s actions from Friday, but Fielder – presiding over the meeting – ruled that wasn’t possible because the withdrawal had already been filed and the intervention deadline had passed.
Molnar, who had advocated for intervening in the FERC case on the argument that NorthWestern was denying Montana customers access to a source of cheap power, then made a motion to file an intervention again.
“The only issue is, will the low-cost energy from the West Coast utilities serve Montana residents and commercial customers to their economic gain, or will it serve data centers and the economic gain of NorthWestern investors?” said Molnar.
Molnar and Pinocci supported the motion, but Fielder, PSC President Jeff Welborn and Commissioner Annie Bukacek opposed it.
In a statement to MTN, NorthWestern spokesperson Jo Dee Black said the company appreciated the PSC’s decision to withdraw the intervention.
“Our priority is providing reliable and affordable energy for Montana families and businesses,” she said. “Expanding our ownership in the Colstrip Power Plant strengthens Montana’s energy security, supports economic growth, and helps protect our Montana customers.”
Mike Green, associate general counsel for NorthWestern, addressed commissioners Tuesday, presenting the company’s initial response to the announced investigation. He denied that the company had intended to evade PSC oversight and said moving PSE’s ownership stake to a subsidiary would protect Montana customers from having to pay the costs of producing that power.
Green said the PSC had previously approved this type of corporate structure, and that the commission would again have a chance to weigh in before any liabilities from the subsidiary could fall on existing customers.
