NW Energy shareholder files suit claiming utility excluded climate proposal from 2020 proxy

In papers filed last week in Missoula District Court, Thomas Tosdal, an attorney who lives near Ovando, contends that NorthWestern has a legal duty under federal law to include his proposal and resolution on climate change in its next annual proxy statement for review and a vote. (The Nature Conservancy/Kili Yuyan

A NorthWestern Energy shareholder is suing the company for omitting his proposal from its 2020 proxy materials, saying the utility is moving toward a “fossil-fuel-intensive train wreck” that shareholders have an interest in reversing.

In papers filed last week in Missoula District Court, Thomas Tosdal, an attorney who lives near Ovando, contends that NorthWestern has a legal duty under federal law to include his proposal and resolution on climate change in its next annual proxy statement for review and a vote.

Tosdal holds the required number of NorthWestern shares and has for more than a year. Therefore, he argues, the company is legally bound to place his proposals before shareholders for consideration.

“The company recognizes how volatile it would be for investors to acknowledge these fundamental truths contained in our resolution,” Tosdal said. “The stockholders, if given the chance, would vote to plan to replace coal-fired generators by 2026 with non-carbon emitting generators backed by 21st century storage technology.”

Tosdal’s proposal cites the science behind climate change and its looming impacts on the state’s main industries, including agriculture and tourism.

He claims that 39% of NorthWestern’s electrical generation stems from fossil fuels, and that the utility projects that its carbon emissions will be “very close” in 2038 as they are now, or roughly 800 pounds of carbon dioxide per megawatt hour.

Most of those emissions will come from the utility’s growing investment in coal, particularly Colstrip Unit 4, which Tosdal described as “an increasingly risky investment” that will require extensive work and eventual cleanup.

He also cites Talen Energy’s plans to shut down Colstrip Units 1 and 2, while Puget Sound Energy, Portland General Electric, Avista Corp., and Pacific Corp. are all mandated by their respective states to eliminate coal-fired electricity by 2025 and 2030.

Tosdal wants his proposal placed before shareholders for a vote during next year’s annual meeting. It calls for NorthWestern to replace its coal-fired generation with renewable energy by the end of 2025, and to share that plan no later than 2021.

“The company is running scared,” Tosdal said. “If it passed, our resolution would bring about a 180-degree turn from NorthWestern Energy’s approaching fossil-fuel-intensive train wreck.”

Jo Dee Black, NorthWestern’s public relations specialist, said Friday the company was following standard procedures and would defend its actions in court.

“NorthWestern Energy is following standard procedure and it is unusual that Mr. Tosdal commenced a lawsuit while a request is pending with the Securities and Exchange Commission,” she said. “It is disappointing that the only contact information Mr. Tosdal provided to NorthWestern Energy was a P.O. Box and that we only learned his email contact information on Dec. 23, 2019 when we were notified of his lawsuit.”

In a letter to the U.S. Securities and Exchange Commission, NorthWestern defended its move to omit Tosdal’s proposal by suggesting, among other things, that it seeks to micro-manage the company “by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”

The utility contends that it must take into account a vast range of complex factors when choosing what supply resources to use to generate electricity that’s affordable, reliable and sustainable.

“This proposal requests that NorthWestern Energy discontinue generating electricity from Colstrip Unit 4 and replace generation with non-carbon emitting electricity generation by the end of the year 2025,” Black said. “In doing this, the proposal seeks to impose a specific time frame and a specific method for addressing a complex policy and limits the judgment and discretion of management, in violation of the SEC’s rule.”

The company also is seeking to dismiss Tosdal’s proposal for being “misleading with respect to any material fact,” including the cost of renewable energy, the cost of future remediation, and the company’s goals around carbon emissions.

While Tosdal believes the company’s carbon emissions in Montana would be 800 pounds in 2035, the company projects a 10% reduction by that year to roughly 740 pounds, with emissions decreasing to 280 pounds by 2045.

“Renewable energy sources are not less expensive than thermal sources,” the company added. “The Resource Plan, which is backed up by extensive modeling, concluded that meeting customers’ future needs with carbon free resources would cost $523 million more than natural gas-fired resources.”

Ratepayers across the state over the past few months have lined up to criticize NorthWestern’s energy procurement plan during public hearings held before the Montana Public Service Commission.

The plan lays out how the utility intends to meet the state’s electricity needs for the next 20 years. Corporate executives have said the utility needs resources that can provide 24/7 power and can be ramped up quickly to meet peak consumption at key points of the year.

They don’t believe renewable sources can meet that need.

But critics disagree and have sounded off during recent hearings. The climate action group 350 Montana stands among them. It backs Tosdal’s proposal and is watching his lawsuit closely.

“This resolution couldn’t come at a more critical time,” said Jeff Smith, co-chair of 350 Montana. “It’s a chance for the company to demonstrate leadership.”

Smith blamed the company’s corporate leaders for poor management and being out of touch with the climate crisis and the will of both ratepayers and shareholders.

“What we see is NorthWestern Energy CEO Bob Rowe and vice president John Hines hell-bent on purchasing a majority ownership in Colstrip 4, a worn-out, expensive and one of the most climate-polluting plants in the U.S. We’re watching the sequel to the Montana Power debacle, and stockholders should have the opportunity to put on the brakes.”