Senate Bill 331, the Montana Energy Security Act of 2019, creates the possibility for NorthWestern Energy to secure a 150 megawatts share of Colstrip Unit 4 for $1 to provide energy for our Montana customers at the cost of production. This would help fill the need for more 24/7 energy sources in our Montana electric portfolio and extensive research shows this is the most cost efficient way to accomplish that.
Colstrip provides low-cost energy
If NorthWestern Energy had owned the 150 megawatt share of Colstrip Unit 4 from Feb. 1, 2019 to March 4, 2019, (32 days) Montana customers would have paid $13.5 million less for electricity.
> Electricity from Colstrip Unit 4 costs less than $20 a megawatt share to produce. Regardless of our portfolio needs, energy from this resource lowers customer costs whenever the price of electricity from the market is more than $20 per megawatt. The higher the market price, the greater the value of Colstrip energy for customers.
> In February 2018, the Federal Energy Information Administration data shows the average cost of a megawatt hour bought on the Mid C Peak market was $21.61. In February 2019, the average cost was $92.84 a megawatt hour. That’s a 329 percent increase.
> On March 1, 2019 energy bought on the Mid C Peak market ranged from $350 to $1,000 a megawatt, with an average price of $890.56 a megawatt.
> Extensive research identifies that an additional share of Colstrip Unit 4 is the lowest cost option to owning more energy generation and mitigating the market risk to NorthWestern Energy’s customers.
Montana Public Service Commission’s authority is intact
Senate Bill 331 affirms Montana Public Service Commission oversight and customer protection and limits the size of the potential purchase of an additional share of Colstrip Unit 4 to 150 megawatts.
> The bill limits capital investments by NorthWestern Energy for a new share of Colstrip Unit 4, the 150 megawatt share, that can be included in rates to $75 million over 10 years, whichever comes first. Montana Public Service Commission approval for more than $75 million in investments would be needed and for all investments thereafter.
> On March 18, the Montana Public Service Commission voted to support Senate Bill 331.
Colstrip energy is reliable
Energy from Colstrip Unit 4 is available to meet NorthWestern Energy’s Montana customers’ demands whether it is 20 below in February at 7 p.m. or 100 degrees at 2 p.m. in August.
> Energy sources are not equal. Variable energy sources, such as wind, solar and to some extent even hydro, require 24/7 energy to balance their output and retain reliability in the grid. Colstrip is a source of 24/7 energy.
> NorthWestern Energy’s customers face increasing risk of black outs or high rates because of our heavy reliance on market purchases to meet peak demand for energy.
> Electricity supply service in Montana has been tumultuous during the past 20 years, beginning with the failed utility deregulation policies. Montana cannot afford the risk of not enough owned 24/7 energy sources.
The Colstrip Transmission System is critical for Montana
Senate Bill 331 provides an opportunity for NorthWestern Energy to buy more ownership in the 500 kilovolts interconnected transmission line from Colstrip, which is an important asset to import energy from other markets to Montana, as well as to export new renewable energy produced in Montana to out-of-state markets.
> NorthWestern Energy operates the Colstrip Transmission System, but the system is jointly owned by other Colstrip power plant owners.
> The Colstrip Transmission System’s future viability is currently tied to regulations and decisions in other Pacific Northwest states that are not being made in the best interest of Montanans.
> Acquiring additional ownership in the Colstrip Transmission System puts Montana on a path to be back in control of our energy future.
Colstrip’s future cleanup costs will be shared by all of owners
Senate Bill 331 prohibits shifting the liability for environmental remediation of Colstrip from existing owners to NorthWestern Energy customers. There are six owners of the Colstrip Power Plant now and all six, including NorthWestern Energy, have a financial obligation, proportionate to their ownership, in the environmental remediation of the plant.
Senate Bill 331 provides certainty for the Colstrip community, Montana
The Colstrip Power Plant, which operates four coal-fired generating units, employs 360 people today. Today NorthWestern Energy owns a 222 megawatt share of Colstrip Unit 4, about 30 percent.
> Colstrip Units 1 & 2 will shut down by 2022 to settle a lawsuit filed by the Sierra Club and Montana Environmental Information Center.
> 3,300 jobs would be lost statewide and nearly $250 million in income would be lost if Colstrip Units 3 and 4 were shut down early, according to a study by the Montana Bureau of Business and Economic Research. The study shows an early shutdown of Colstrip Units 3 & 4 could bring a loss of $80 million in state tax and non-tax revenues per year.