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NorthWestern Pays 2018 Colstrip Coal-Fired Power Plant Forced Closure Costs

Colstrip coal-fired power plant seen through a gate
Kayla Desroches
Yellowstone Public Radio
Colstrip coal-fired power plant seen through a gate on Oct. 2, 2020.

Correction Oct. 30, 2020: A previous version of this story inaccurately stated NorthWestern Energy customers will pay $14.4 million for the cost of replacement power during the months in 2018 the utility bought energy on the open market while part of the Colstrip coal-fired power plant was was offline due to air quality violations. That number is incorrect.

The Montana Public Service Commission determined NorthWestern is fully responsible for the cost of replacement power during the time Colstrip’s largest units were out of commission in 2018 due to air pollution.

NorthWestern Energy, Montana’s largest utility, will assume the entire cost of replacement power for roughly three months in 2018 when part of the Colstrip Steam Electric Station was taken offline after it violated federal clean air laws.

NorthWestern included Colstrip costs when calculating how much it’ll charge rate payers for the difference between expected and actual costs in 2018 and 2019, a number which the Montana Public Service cut significantly on Tuesday, Oct. 27.

Regulators’ decision could result in a $20 dollar refund to the average residential customer in Montana. The Montana Public Service Commission agreed with intervenors Montana Environmental Information Center and the Montana Consumer Counsel that NorthWestern was overcharging customers.

The $23.8 million NorthWestern Energy originally sought in its annual filing includes the 2018 shutdowns at the Colstrip plant along with other unanticipated expenses in NorthWestern’s coverage area.

NorthWestern bought energy on the market in 2018 to provide customers with power during the Colstrip power plant shutdown, paying about $6.2 million more than the cost of generating power at the plant. NorthWestern had hoped to recover the majority of that from customers.

The Montana Public Service Commission (PSC) on Tuesday, Oct. 27, decided NorthWestern bears responsibility for the entire $6.2 million because the utility could have acted to avoid the shutdown.

Additionally, it found NorthWestern could not apply new state code that went into effect in 2019 and removed another $3.7 million from NorthWestern’s requested recovery of unexpected costs.

That left NorthWestern able to collect $14.3 million from ratepayers instead of $23.8 million.

NorthWestern started collecting $23.8 last year through interim rates, which means NorthWestern now owes ratepayers more than $9.9 million, including interest.

In a press release, NorthWestern calls the decision disappointing and criticizes the PSC for not showing more support.

Kayla writes about energy policy, the oil and gas industry and new electricity developments.