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NorthWestern to work with Mont. governor on possible Colstrip ownership changes

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NorthWestern to work with Mont. governor on possible Colstrip ownership changes

Inresponse to a request from Montana Gov. Steve Bullock, President and CEOBob Rowe said his utility is willing to participate in a working group toconsider a transfer of ownership of coal-fired Colstrip plant units 1, 2 and 3.

Inan April 5 letter toRowe, Bullock said he had already asked Rowe about whether NorthWestern wasinterested in acquiring those facilities. Rowe back on April 6 sayingNorthWestern was willing to participate in the governor's working group, butthat he had to put the interests of his company's retail customers first.

Bullockwrote that he also had conversations with Talen Energy Corp. and subsidiaryPuget Sound Energy Inc.,the current joint owners of Colstrip units 1 and 2 and a portion of unit 3, andthat both companies were willing to participate in a working group to explorealternative plant and interconnecting transmission line ownership arrangements.

"Asyou know, there has been a lot of discussion around the future of those unitsand whether Talen and Puget will sell or even close them," the governorsaid. Talen is the four-unit plant's operator; Puget Sound is thelargest single owner of the plant's output.

Inreply, Rowe said the electricity NorthWestern gets from Colstrip units 3 and 4is vital to the utility's customers because it is available 94% of the time andis a key contributor to peak needs. Rowe said units 3 and 4 are among thecleanest coal-fired plants in the country and Colstrip provides importantsupport for the utility's transmission system.

DespiteRowe's assessment, Colstrip faces a cloudyfuture.

Rowesaid he shared the governor's concerns that without Colstrip industries inMontana would face economic and reliability challenges in importing power frommarketers in other states and suggested including industrial customers in thegovernor's working group.

"Aprimary question is, what are the preferences of the industrial customers whocurrently purchase power on the wholesale market, including from Talen?"Rowe asked. "We suggest including them in the working group. Ultimately,any outcome must be both commercially sound and have the support of state andfederal policymakers and of the customers who would ultimately purchase theelectricity generated at this facility."

Thegovernor referred to a personal conversation with Rowe and to subsequent publiccomments Rowe made at an energy conference in Billings, Mont., in which Rowesaid the utility's additional ownership in the Colstrip plant was possible,although it would not fit the company's risk profile.

"Duringthat discussion and later as a panelist during the Montana Energy Expo inBillings you also conveyed very real and understandable obstacles to any effortby NorthWestern to acquire those interests," Bullock wrote.

Asreported in the Billings Gazette,Rowe was responding to questions from Montana Public Service Commission ViceChairman Travis Kavulla at the Montana Energy conference in Billings. Rowe wasa panelist for a discussion on wholesale electricity markets in the West andKavulla moderated the panel.

Bullocksaid he appreciated Rowe's concerns about environmental cleanup, associatedliability and NorthWestern's concerns about taking on the role of a merchantgenerator, but that Montana's energy future necessarily includes a discussionregarding options for the future of Colstrip.

"Weare all concerned about the future of Colstrip, the community, workers, and thevaluable electricity that is provided by those facilities, both for in-stateconsumption by Montanans and for export to our neighbors," Bullock wrote.

Rowereplied that the governor made clear there are significant legal and regulatoryconstraints. He noted NorthWestern's ownership consists of 30%, or 222 MW, inunit 4 alone. "We will not consider any scenario that wouldcause harm either in the form of increased cost or risk to our current retailsupply customers, or would jeopardize the support of our equity and debt ownerswho enable our investment in serving our customers," he told the governor.

"Wealso share your concern, and that of other Montanans, about the potentialimpacts on Montana policy changes such as the Clean Power Plan," Rowe notedin his letter, referring to the U.S. EPA's carbon emissions rule for existingpower plants, which the Supreme Court has stayed pending the outcome of federallitigation.

Inan electric supply resource procurement plan NorthWestern on March 31, the utility saidColstrip unit 4 provides long-term value and that NorthWestern has arisk-sharing agreement with Talen Energy regarding operation of units 3 and 4in which each party receives 15% of the units' combined output and isresponsible for 15% of costs for both units.