Northwestern Energy acquires Avista Energy share of Colstrip
This file photo shows the Colstrip coal-fired power plant in southeast Montana. (James Woodcock/Billings Gazette via AP)
| January 17, 2023 9:00 AM
HELENA — “I may be the only CEO in the utility industry adding coal to his portfolio,” said President and CEO of Northwestern Energy Brian Bird at the Great Northern Hotel Monday night.
Northwestern Energy announced it signed a contract Monday acquiring all of Avista Energy in the active units in Colstrip, meaning Montana coal power will serve more Montana residents in 2026.
“This provides a mechanism for both Units Three and Four 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,” said Northwestern Vice-President of Supply/Montana Government Affairs John Hines.
The audience included legislators, lobbyists and Gov. Greg Gianforte, who attended and gave remarks.
Gianforte was credited with having put the gears in motion for this deal, with new-on-the-job Bird saying the conversation kicked off at the bar at the Governor’s Cup Golf Tournament last summer.
“I was very pleased to have a hand in getting the parties to the table for a discussion, but just as it is with raising horses, you can lead them to water but you went into the bar and you drank on your own,” Gianforte said to Bird during his remarks.
The move means that Northwestern will acquire Avista’s share of ownership in the Colstrip plant, offering the company an exit it needed to fulfill laws passed in other states barring the purchase of coal-fired electricity. The move also helps stabilize one of the few operational coal fired plants in the West and provides Northwestern more generation capacity as demand grows. By closing the deal, Northwestern owns more of Colstrip, and will now be in a better position to determine the fate and future of the aging generation station.
Gianforte said it was a good deal for Montana, saying that the state’s grid would not be stable without it.
“And it’s a good deal for Colstrip, because we want to see this plant operate through its useful life,” he said.
Hines said the contract is effective Jan. 1, 2026, with no need for legislation or Public Service Commission approval. The acquisition will be for 222 megawatts. Dennis Vermillion, President and CEO of Avista Energy, said Avista will continue to honor its obligations at the plant until 2026.
Northwestern spokesperson Jo Dee Black clarified that when the time comes for rate changes, that will require PSC review.
Hines said that the deal cost Northwestern nothing and that it will not increase rates for customers.
“Our customer rates will not go up because of this transaction. In fact, they’re gonna see a probably $30 to $40 million of cost reduction beginning of 2026 through 2029 each year,” Hines said.
Colstrip Units 1 and 2 were retired in 2020. Black said Avista owns 15% of Colstrip Units 3 and 4, but the energy from those units goes back to Avista’s customers in Washington and Idaho. The state of Washington has a law that mandates coal-free power generation by the end of 2025, so Avista was likely to exit Colstrip.
Black said that when demand for energy is high and there is little wind generation, giving the example of when the temperature dropped in late December, the state has to go to the market to buy energy. She said it is typically sourced from out of state and can be costly.
A Northwestern press release said that 41% of the utility’s peak Montana energy load was met with market purchases.
“The difference will be when we have it, it will be dedicated to serve our customers here,” Black said.
“Obviously not everyone in the state is going to be receptive to this transaction. For those of you who are supportive of it, we ask for your help in the coming months and years,” Hines said.
Colstrip emits 144 million tons of carbon dioxide and is one of the largest polluters in the U.S., as reported by E&E News. Talen Energy, another part-owner of Colstrip, filed for bankruptcy at the plant last year.
The room was mostly filled with supporters, with Vermillion of Avista Energy, commenting, “It’s not everyday utilities get standing ovations.”