BILLINGS – NorthWestern Energy must pay back $8.2 million to customers for the cost of replacement power during a seven-month shutdown in 2013 of a Colstrip coal-fired unit, a Montana district judge ruled Monday.
Yellowstone County District Judge Rod Souza upheld a 2016 split decision by Montana Public Service Commission, which stated that NorthWestern could not pass along the cost of power bought on the open market while the unit was idle because of a mechanical failure.
NorthWestern had not acted prudently in failing to perform a detector test prior to the outage, failing to have better oversight of the plant’s operations and failing to investigate buying insurance and seeking damages from other parties, the commission ruled in a 3-to-2 vote in 2016.
"The decision sends an important message to the state’s regulated utilities, that they cannot automatically assume expenses like these will be passed on to ratepayers. The burden of proof is on the utility to prove to the PSC that they have acted responsibly. In this case, NorthWestern did not, and therefore, consumers needed to be held harmless," said PSC Commissioner Roger Koopman (R-Bozeman).
Souza upheld the PSC on all those points.
“This ruling is good news not just for the $8.2 million at stake in this instance. It’s also welcome because it establishes a clear precedent that there are times when the utility must take responsibility when its property fails to perform, and cannot simply hide behind contractors or other third parties to avoid that responsibility,” Public Service Commissioner Travis Kavulla, R-Great Falls, said in a written statement.
NorthWestern Energy owns 30% of Colstrip unit 4. Spokesman Tom Glanzer said NorthWestern officials are just learning of the decision and are now reading and understanding the judge’s ruling.