FOR IMMEDIATE RELEASE
FEBRUARY 5, 2020
CONTACTS
Anne Hedges, (406) 443-2520; ahedges@meic.org
Brian Fadie, (406) 443-2520; bfadie@meic.org
NorthWestern Energy Doubles Down on Expensive Coal Plant
The Montana Environmental Information Center (MEIC) opposes NorthWestern’s proposal to buy more of the expensive, aging, and ailing Colstrip Unit 4 coal-fired power plant. Buying an additional share of an increasingly expensive plant will mean higher bills for Montana ratepayers and seems primarily designed to enrich NorthWestern shareholders at the expense of ratepayers.
“NorthWestern is ignoring markets and fundamental economics on its quest to double down on coal resources. At a time when other utilities and investors are planning their exit from coal-fired generation because it cannot compete in the modern electricity market, NorthWestern is moving in the opposite direction. That’s bad news for everyone who pays a monthly bill to NorthWestern,” said Anne MEIC Deputy Director. “Hold on to your wallets. There’s a reason investors and utilities are exiting coal. It’s too expensive and too dirty. Furthermore, NorthWestern’s refusal to be transparent about the increasing costs required to operate the plant, undermine its claim that this will be good for ratepayers.”
“Clean energy is outcompeting coal on a regular basis. It’s just plain cheaper and cleaner. Montana has the second-best wind resource in the country and the two cheapest power plants for NorthWestern ratepayers right now are wind facilities. The most expensive is Colstrip,” said MEIC Clean Energy Program Director Brian Fadie. “NorthWestern’s attempt to lock ratepayers into expensive, last century technology is both confusing and disappointing. No other utility in the country is buying into coal right now.”
MEIC looks forward to conducting a detailed analysis of this proposal, however despite NorthWestern’s fundamental lack of transparency in the filing and based on our initial review as well as previously available information, we strongly believe this purchase will cost ratepayers millions in additional costs per year. Colstrip Unit 4 is reaching the end of its design life, causing increasing maintenance and repair costs. Additionally, NorthWestern paid about $25 million for coal in 2018 to run its existing Colstrip share. If it nearly doubles its ownership this will significantly increase that amount each year. More importantly NorthWestern and the other Colstrip owners just signed a new contract for coal that resulted in an increase for the cost of coal.
Below are some of the known costs NorthWestern ratepayers would likely be on the hook for if the company acquired Puget Sound Energy’s share in Unit 4.
NOTE: Because NorthWestern has repeatedly insisted Colstrip will run until at least 2042, these costs would likely be on ratepayers for decades.
1. $28.9 million per year more in operation & maintenance costs (O&M).[i]
2. These O&M costs have increased 6.9% per year with no signs of stopping.[ii]
3. O&M costs will rise even more when units 1 & 2 close.[iii]
4. Fuel for the increased share of Colstrip is currently $20 million per year (this is part of O&M costs).A new coal contract was recently signed, and NorthWestern has said coal costs will be going up, but still hasn’t disclosed by how much.What is known is that NorthWestern’s cost of fuel at the Colstrip plant have increased 35% since 2012.[iv] Talen blamed uneconomic fuel costs increases for its decision to close Units 1 & 2 sooner than expected.
5. Up to $20 million (or more) for a major fix of the boiler on unit 4.[v]
6. Millions in costs when the plant breaks down. Colstrip Unit 4 has had numerous serious problems in the last decade. It broke down for 6 months in 2009 and again in 2013. In 2018 it shut down for 2.5 months when it failed to comply with the Mercury and Air Toxics Standards. NorthWestern is currently trying to force ratepayers to pay an extra $7 million because of that violation. If NorthWestern’s customers own more of the plant, they would have to pay more to fix it when it inevitably breaks down again.
7. Higher cleanup costs. Montana Department of Environmental Quality estimated cleanup costs at the plant at up to $700 million. The more NorthWestern owns, and the longer the plant runs, the more ratepayers are on the hook for millions in cleanup costs.
8. Increased share of property taxes.
9. Increased share of government fees (i.e., annual air pollution fees).
10. Climate change and carbon price. There will likely be a price on carbon emissions (or other restrictions) in the next decade. Owning more of Colstrip puts NorthWestern ratepayers at risk of paying extra for this heavily polluting power plant.
NorthWestern’s failure to disclose many of these expensive and escalating costs should be of serious concern to ratepayers.
[i] Puget Sound Energy, FERC Form 1.
[ii] 19-02-12 Schlissel Testimony FINAL in NWE Rate Case, page 29
[iii] NWE SEC 10-Q
[iv] NWE FERC Form 1, 2012 and 2017
[v] Billings Gazette, 11-27-19, https://billingsgazette.com/news/state-and-regional/m-in-repairs-needed-at-colstrip-unit-regulators-say/article_78ff8074-c524-5443-bf96-ad1636e5e638.html[
