NorthWestern Energy’s announcement of its intention to acquire Puget Sound Energy’s shares of the unreliable Colstrip plant is the epitome of NorthWestern’s inability to plan for an affordable and reliable energy future. Not only is Montana’s monopoly utility the only utility in the country planning to invest more in coal-fired power, but it’s choosing to invest in the dirtiest, most polluting coal plant in the country.
If this was a private company, the Board of Directors would likely fire the entire executive team for putting shareholders at such great risk. This purchase indicates that NorthWestern Energy wants to enter the wholesale energy market, making this a shareholder asset rather than a customer asset. Shareholders would bear the risk of the acquisition, and they should be extremely worried about this extremely risky and ill-advised investment decision.
Disregarding costs of environmental and remediation implications, the immediate cost liabilities that may fall on shareholders result from these factors:
The Colstrip plant is not reliable.
- In January, when the state reached record lows, the Colstrip plant was down. In mid-July, when the state reached record highs, the Colstrip plant was down. NorthWestern Energy points to these summer and winter periods of peak demand as those most critical for driving this decision to expand capacity, but analysis shows that twice in 2024, the plant has been broken when the state needed it most – and the year is only half-over.
- According to detailed analysis, the plant is only up half the time when Montana needs the power, so NorthWestern Energy has to plan for the 50% of the time that coal-fired power isn’t available. It doesn’t matter if Montana isn’t ready to move away from coal power if it’s not even there when we need it.
NorthWestern Energy isn’t being honest about how this acquisition is going to affect customer rates.
- Extrapolated from NorthWestern’s most recent PCCAM, the annual cost of coal for 814 MW ownership in the plant would be $132 million per year, increasing nearly four-fold from current costs. This will cause energy rates to skyrocket, on top of already increasing rates.
- The plant will need an estimated $2 billion in necessary upgrades in order to continue functioning.
- Estimates from $350 million to exceeding $600 million for pollution compliance
- $1.3 billion for CCS installation with $108 million annual operational costs (DOE study)
- When the plant is down (about 50% of the time), customers pay millions more when NorthWestern Energy is forced to purchase expensive energy on the market due to poor planning, lack of diversification, and inadequate transmission.
Other utilities are planning for and moving toward more affordable and reliable energy generation, proving that it’s not only possible but desirable.
- At the national level, coal provided around 50% of electricity generation for over 50 years, until a steady decline beginning in the early 2000s. By 2023, it made up only 16% of electricity production, with that number still falling. Montana is not immune to the trend of moving away from coal toward other, more affordable and reliable generation sources.
- If NorthWestern Energy claims that Montana isn’t ready to move away from coal, it’s because the utility is not planning for it like most other utilities in the country. Talen Energy and Puget Sound Energy have been planning a transition away from coal-fired power since 2020 and 2021, respectively, proving that transition is possible with appropriate planning and adequate leadership.
- This purchase wasn’t in any of NorthWestern Energy’s twenty-year plans that went through extensive public scrutiny and legally required processes. As a public utility, customers who may bear increasing costs of such an acquisition should have input into such a decision before it is finalized.
- The Montana Public Service Commission has never established that NorthWestern’s acquisition of additional shares would be “reasonable and prudent.”
If you see rats fleeing a sinking ship, it doesn’t make good business sense to invest billions into the sinking ship – it makes much more sense to divest of risky and outdated technology and instead invest in the next generation of energy generation, like every other utility in the country. Montana is falling decades behind and may never catch up to modern energy generation technologies if this acquisition comes to pass.
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