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NorthWestern Energy to increase stake in Colstrip power plant

NorthWestern Colstrip Announcement
Posted at 9:53 PM, Jan 16, 2023
and last updated 2023-01-17 11:40:31-05

HELENA — Leaders with NorthWestern Energy have announced they’re expanding their stake in the Colstrip power plant, as part of a deal they say will ensure the plant keeps supplying power through the end of the decade.

“It provides certainty – certainty for the community, for the workforce, for the state of Montana – and it helps ensure that NorthWestern can reliably meet its customers’ energy needs,” said John Himes, NorthWestern’s vice president of supply and Montana government affairs.

NorthWestern has signed a contract to take over Spokane-based Avista Corporation’s share of Colstrip’s coal-powered output from Units 3 and 4, effective Jan. 1, 2026. The utility announced the transaction Monday at a “Colstrip Community Legislative Reception” in Helena.

Himes said Avista was transferring its interest at no charge to NorthWestern. Avista is already required to end its investment in the Colstrip plant at the end of 2025, because of a settlement agreement with utility regulators in Washington state.

The deal would give NorthWestern authority to use up to 444 megawatts of power from Units 3 and 4 – double its current share. Himes said Avista would continue to be responsible for its share of environmental remediation costs.

Colstrip has a complex ownership structure, with six energy companies all holding stakes. Several of the companies, based in Washington and Oregon, are planning to transition away from coal-fired power in the coming years.

This agreement comes several months after Talen Energy, another of the co-owners, announced plans to acquire the stake of Puget Sound Energy. On Monday, leaders from Talen and PacifiCorp – yet another co-owner – spoke at the Helena event and reiterated their commitment to the Colstrip plant through the end of the decade.

NorthWestern leaders said recent high-demand events have reinforced the need for coal as a reliable, affordable power source.

“I may be the only CEO in the utility industry adding coal to his portfolio,” said Brian Bird, NorthWestern’s president and CEO, during the reception.

Himes said, in times of extreme demand, NorthWestern is currently forced to purchase much of its power on the open market. He said, during the severe cold snap in December, they had to rely on the out-of-state market for more than 40% of their needs – with the price sometimes many times higher than normal.

“There’ll be times, when we have wind and solar operating or the hydros running at a really high time, that we won’t need that additional power, but yet it’s an extremely cost-effective security blanket for when we do need it,” he said.

Himes said NorthWestern doesn’t believe the transaction will require any action by the Montana Public Service Commission at this time, because it came with no purchase price to be passed on to ratepayers. He also said it would not require any new laws from the Montana Legislature. In 2021, lawmakers had extensive debate on a proposed bill intended to encourage NorthWestern to take on a larger share of the Colstrip plant.

During Monday’s event, leaders from the Colstrip community hailed the news.

“My heart is full tonight,” said Colstrip Mayor John Williams. “I’ve had the honor to have lived in that community for over 50 years, retiring from those plants. Colstrip is my life, so thank you for that announcement tonight.”

“This is a great occasion, to find out that we actually are going to keep generating power out at Colstrip,” said former state senator Duane Ankney, a former coal miner and one of the most prominent advocates for Colstrip during more than a decade in the Legislature.

“I think I can retire now,” Ankney added later.