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NorthWestern Energy to buy Puget Sound Energy’s 25 percent interest in Colstrip

(KPAX) Montana’s dominant electric utility – NorthWestern Energy – announced early Tuesday that it intends to buy an additional 185 megawatts of coal-fired power generated by the Colstrip 4 plant.

The surprise announcement came just one day after scores of renewable power advocates rallied and spoke in Helena against NorthWestern’s 20-year plan for procuring power resources, saying the utility should concentrate more on acquiring clean energy and how best to replace Colstrip power.

NorthWestern said it has reached an agreement to buy the 185 megawatt-share of Colstrip 4 from Puget Sound Energy, which wants to end its involvement with the coal-fired plant. The acquisition price: $1.

NorthWestern’s 370,000 Montana electric customers, however, would still be charged for the operating costs of the new share of Colstrip power.

If the purchase is approved by the state Public Service Commission, NorthWestern would become a majority owner of the Colstrip 4 plant, at 55 percent. Other utilities in the Pacific Northwest own portions of Colstrip 3 and 4; Colstrip plants 1 and 2 are slated for closure within the year.

NorthWestern CEO Bob Rowe told MTN News Tuesday that the net cost to ratepayers of the new share of Colstrip power would be zero, because the company could buy less power on the open market to serve customers and will sell back some of the Colstrip power to Puget Sound for five years.

Rowe said the Colstrip power fills a “big hole” in NorthWestern’s energy portfolio, just as the company plans to embark on a five-year plan to purchase or acquire 750 to 800 megawatts of power.

“Our customers in Montana are more exposed to the market than customers of any other electric company in the western United States,” he said in an interview. “This transaction allows us, very cost-effectively, to fill about 25 percent of that hole and also actually preserves the opportunity for future resources to come in when they are cost-effective in the future, whenever Colstrip Unit 4 is retired.”

Renewable-power advocates, however, blasted the announcement and questioned whether the acquisition is a good financial deal for consumers.

Anne Hedges of the Montana Environmental Information Center told MTN News that while NorthWestern may be getting its share of the plant for $1, many additional costs will be passed on to consumers, such as repairs of the plant boiler and a new coal-supply contract.

“So while it might be free on the surface, all of those costs start to add up, and it is going to be a very expensive resource,” she said. “This is not a good investment for consumers.”

NorthWestern’s plans to expand its Colstrip ownership also comes as other utilities in the region are abandoning coal-fired power, saying they and their customers want to move to cleaner energy.

When asked why NorthWestern is bucking that trend, Rowe said NorthWestern is unique among regional utilities, in that it needs to acquire more power, now, to meet customers needs. He also said NorthWestern’s portfolio already has twice as much renewable power as the average utility – about 60 percent compared to 30 percent.

However, the acquisition of the additional Colstrip power would reduce that renewable-power percentage for NorthWestern to about 56 percent, the company said.

Rowe said the company takes its “environmental stewardship in Montana extremely seriously,” and is committing to reducing its carbon-generated power 90 percent by 2045.

Hedges scoffed at the utility’s commitment, saying that reducing carbon emissions is a much more urgent task.

“The world can’t wait 25 years to reduce carbon pollution,” she said. “It’s time to get with the program.”

The NorthWestern transaction with Puget Sound also will include purchase of portions of transmission lines, which Rowe called a key piece of power infrastructure that can help move market-priced power to industrial consumers in Montana and transport in-state renewable power to markets outside the state.

Hedges cast doubt on this proposition as well, noting that NorthWestern recently asked for a big increase in transmission rates on the lines it already owns.

NorthWestern said it will submit the proposed acquisition of more Colstrip power to the PSC within the next month.

The company also plans to begin a bidding process for another 200 to 250 megawatts of power within the next two months, as part of its plan to acquire more resources to serve customers in Montana.

Montanans say no to NorthWestern’s plan to add coal, natural gas plants