NorthWestern proposing $250M natural gas plant in Laurel

NorthWestern Energy has proposed building a $250 million natural gas plant in Laurel to help meet part of its need for power, the utility said this week in a news release.

The Laurel Generating Station is among three agreements NorthWestern announced in the news release to add a total 325 megawatts of power to its portfolio. The additions would meet more than half the utility’s estimated 555 megawatt deficit. The news release described the following:

• In Laurel, reciprocating internal combustion engine, or RICE, units will add 175 megawatts and be online by Jan. 3, 2024;
• A purchase agreement for 100 megawatts from Powerex Corp, a subsidiary of BC Hydro, will add energy mostly from hydroelectric resources; and
• A contract pending on an Energy Storage Project will add a 50 megawatt battery storage system using lithium-ion technology.

NorthWestern anticipates submitting a proposal to the Montana Public Service Commission for the battery storage contract and the Laurel Generating Station around May 14. A public hearing on the submission is likely toward the end of the year, according to the PSC, which regulates the utility monopoly.

Bob Decker, of the Public Service Commission, said some details NorthWestern receives are considered proprietary, but commissioners generally will be able to evaluate the proposals and request contextual information.

“Are the costs competitive? How do we know? What are the alternatives?” Decker said.

The announcement from NorthWestern came as the Montana Legislature considers controversial legislation, Senate Bill 379, to help the utility purchase more power from Colstrip or additional ownership of its coal fired plants. The bill would tie the hands of the PSC from evaluating acquisitions to set fair terms for the utility and ratepayers.

Energy analysts have said SB379 could saddle ratepayers with millions of dollars they shouldn’t be obligated to pay, such as a previous owner’s remediation costs. But people across the political spectrum seem to agree NorthWestern needs more access to energy at its fingertips, or dispatchable power, to meet need during highest use times, such as days long blizzards.

NorthWestern’s Jo Dee Black said all the additional 325 megawatts would be considered dispatchable, or available on demand, but they don’t change the utility’s interest in Colstrip. She said the utility would continue to have the need for energy even if the PSC approves the proposals NorthWestern plans to file.

“There’s still a need for more capacity because of this deficit for Montana customers,” Black said; NorthWestern has estimated its deficit at 555 megawatts.

In a statement about SB379, NorthWestern said it has concluded a purchase agreement with a Colstrip owner is the best way to address reliability, and Colstrip offers an affordable option.

“We believe acquiring additional critical power from Colstrip is in the best interest of our Montana customers,” said John Hines, of NorthWestern Energy, in a statement. “Our focus is and will continue to be reliable, affordable energy that is available when our customers need it and grid stability for all Montanans whether they are a NorthWestern Energy customer or not.”

The three contracts announced this week that will be under consideration at the PSC came out of a request for proposals NorthWestern made in January 2020. A third party, Aion Energy, received 180 proposals from 21 bidders, NorthWestern said. Aion evaluated the responses and narrowed them down because NorthWestern itself had submitted its own proposal, Black said.

“These were the three that are determined to meet the needs of our customers the best,” Black said.