NorthWestern Energy must be held accountable
On Aug. 8, 2022, NorthWestern Energy filed to increase retail electricity rates by 25%. The Montana Public Service Commission (PSC), an elected body charged to reasonably balance the needs of Montanan ratepayers with utilities’ ability to provide reliable and affordable energy, is accepting public comment on this rate case until April 11th, 2023.
The PSC already approved an interim (and reversible) rate increase of 12.6% in October, costing the average Montanan ratepayer an additional $135 from October 2022 through September 2023 in electricity bills. If approved, the full increase would cost ratepayers $270 annually.
NorthWestern’s uncompromising commitment to the Colstrip generation plant is inextricably tied to this rate increase, while investments into future natural gas plants will have NorthWestern continuously pushing rates higher.
Colstrip’s coal-fired power plant is the largest electricity generation plant in Montana, and one of the country’s largest carbon dioxide point polluters, emitting 8.2 million tons annually. In 2020, generation units 1 and 2 were closed permanently citing that they were “no longer economically viable.”
The two remaining units are jointly owned by several utilities, sending electricity to Idaho, Oregon, Washington, and throughout Montana.
When NorthWestern purchased its share in 2010, the PSC guaranteed a 10% return on investment (ROI) through 2043, the end of the infrastructure’s economic life. The owning utilities had no PSC-guaranteed ROI on units 1 and 2, so they were closed — without disrupting reliable electricity services — rather than passing increasing costs to ratepayers. NorthWestern now seeks to pass those costs to ratepayers for the remaining units.
NorthWestern is selling dirtier and more expensive electricity to Montanans, and they expect ratepayers to front the costs. Both mining coal and operating deteriorating coal plants have become increasingly expensive as the costs of utility-scale wind and solar electricity generation have fallen, now more affordable than coal and natural gas.
Additionally, the Inflation Reduction Act includes tax credits making renewable energy generation and storage more economically competitive than ever against NorthWestern’s fossil fuel generation infrastructure.
Legislation in Washington and Oregon requires utilities to eliminate coal from generation portfolios by 2025 and 2035, forcing larger proportions of this expensive electricity into the Montana generation portfolio as long as Colstrip remains operational. This caused coal electricity to increase from 15.6% to 23.0% of NorthWestern’s generation portfolio between 2019 and 2021, coinciding with a reported 10% decline in carbon-free electricity.
Furthermore, NorthWestern recently announced they will increase their ownership in the Colstrip plant, despite already bypassing PSC approval to begin constructing their $250 million natural gas plant near Laurel — audacious investments further tying Montanans to expensive and damaging fossil fuels for decades.
NorthWestern faces no market competition in Montana, launching excessive infrastructure projects at ratepayers’ expense with little enforced accountability to plan for future reliable and affordable electricity generation.
In declining the rate increase, the PSC could force NorthWestern to pursue a cleaner, more affordable generation future. In 2019, the Montana Legislature passed HB0467, allowing utilities to refinance stranded generation assets, such as the Colstrip plant, through ratepayer-backed securitized bonds. This empowers utilities to accelerate asset depreciation timelines while remaining financially solvent to reinvest and continue providing reliable electricity to Montanans. NorthWestern must pursue securitized bonds to plan for Colstrip’s early retirement, reinvesting in affordable, carbon-free electricity generation alternatives.
It is the Public Service Commission’s elected duty to hold NorthWestern accountable, standing with ratepayers who will not shoulder economically negligent fossil fuel infrastructure. Declining NorthWestern’s 25% rate increase is the first step.
Submit public comment on Docket 2022.07.078 electronically to pschelp@mt.gov or mail to 1701 Prospect Ave. Helena, MT 59601.
Nicholas Fitzmaurice is in his final semester at Montana State University Bozeman, where he studies industrial and management systems engineering with a minor in sustainability and environmental stewardship.