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Lawsuit challenging `pre-approval’ of Montana power plants goes forward

HELENA (KPAX) — A lawsuit challenging a Montana law that plaintiffs say allows NorthWestern Energy to shift the risk of power-plant acquisition entirely to ratepayers will proceed, a state judge has ruled.

District Judge Jason Marks of Missoula denied a request from NorthWestern Energy and the state to dismiss the suit filed by an environmental group and its members, who are trying to halt utility plans to build a new gas-fired power plant in Laurel.

350 Montana filed suit in May, saying an 18-year-old law allowing regulatory “pre-approval” of power plants and contracts violates the state constitutional ban on the state granting special privileges to a businesses or other private party.

Monica Tranel, an attorney for 350 Montana, told MTN News Tuesday the law allows NorthWestern to take “zero financial risk” for the acquisition of power resources to serve its 380,000 Montana electric customers.

“It gets to the point where you have to say, `This is wrong, this is corporate greed,’” she said. “They are driving up the cost of these acquisitions for the purpose of locking us into these costs, for all time, that will never be walked back – and can’t, under the (law).”

NorthWestern Energy said Tuesday the law benefits consumers by ensuring that the Public Service Commission vets any power resource before it’s acquired by the company, and confirm whether it’s appropriate.

“The (law) is an important factor in NorthWestern’s ability to provide cost-effective rates and reliable energy service to our Montana customers,” the company said in a statement.

NorthWestern, the state and 350 Montana will now submit arguments to Judge Marks, who’s expected to decide the law’s constitutionality sometime next year.

Meanwhile, the PSC will continue to consider NorthWestern’s request for pre-approval of its proposal to build and own a 175-megawatt natural gas-fired power plant in Laurel and enter into a contract with a new 50-megawatt batter-storage project.

NorthWestern Energy is seeking to recover $54 million from electric ratepayers to cover costs of the gas plant.

A public hearing on the request is scheduled before the PSC in January. 350 Montana is a party in that case as well, along with many other companies, individuals and groups.

If any new power resource is pre-approved by the PSC, the commission is severely limited in denying the utility, in the future, from recovering costs associated with the resource, regardless of future events or findings.

NorthWestern and the state had asked Marks to dismiss 350 Montana’s lawsuit, saying the group’s complaints about pre-approval are “premature” and can be made in the case before the PSC.

But in his ruling last week, Marks said constitutionality of pre-approval is “largely a question of law,” and that he saw no reason to delay settling the issue – particularly when “considerable sums of money appear to be at stake.”

“The court presumes that avoiding unnecessary costs to all parties is beneficial and can be realized by addressing constitutional issues sooner rather than later,” he wrote in his Sept. 1 order.

350 Montana supports development of clean, renewable power, instead of fossil-fuel power. Its name refers to the goal of reducing carbon-dioxide concentration in the atmosphere to 350 parts per million (ppm).

Current atmospheric concentrations of carbon-dioxide, worldwide, are between 410 and 420 ppm.

The group and three of its members who live in Missoula filed suit in late May to block the PSC from granting pre-approval in the NorthWestern case and have the pre-approval law declared unconstitutional.

The pre-approval law, passed in 2003 and amended in 2007 as the state backtracked on utility deregulation passed in the late 1990s, “shifts the risk of absorbing imprudent and unreasonable costs in the acquisition of an electricity-supply resource from (NorthWestern) to its ratepayers,” the suit said.

It removes any incentive for NorthWestern to control costs at the pre-approved plants and basically encourages the company to increase costs to “obtain the profit guaranteed by law,” it continued.