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NorthWestern Energy drops bid to buy out Colstrip plant co-owner

Posted at 9:13 AM, Oct 30, 2020
and last updated 2020-10-30 11:13:04-04

NorthWestern Energy announced Thursday it has dropped its bid to increase its share of the Colstrip power plants with a purchase of 92.5 megawatts and added transmission capacity from Puget Sound Energy.

The decision came less than a month after staff members of the Washington Utilities and Transportation Commission recommended against approving the sale for $1, saying it was not in the best interest of Puget Sound's ratepayers in Washington state.

The deal required approval from both the Washington utilities commission and Montana's Public Service Commission. The plants are continuing to run, and daily operations are not affected, according to NorthWestern.

Puget Sound, which jointly agreed with NorthWestern to end the deal, owns 25 percent of Colstrip's 3 and 4 units and provides power to about 1 million customers in western Washington.

The company is looking to get out of the coal business to meet clean-energy standards in Washington, and the low price was in exchange for turning over operating costs to NorthWestern, Montana's largest utility.

NorthWestern officials said they were disappointed at having to drop out of the deal, adding they felt it was unlikely it would be approved in Washington state.

“This is a huge loss for Montana and our customers,” said NorthWestern Energy Vice President Energy Supply and Montana Government Affairs John Hines in a written statement. “We pursued this agreement because it provided a way to immediately address some of our critical capacity shortage at a very low cost.

"In addition, it created a reserve fund to address the environmental costs for NorthWestern Energy’s existing share of Colstrip Unit 4, which would have benefited our Montana customers," the statement continued. "

The environmental responsibilities for the purchased share of Colstrip Unit 4 remained with the seller. And it gave us the opportunity to add transmission assets to import and export energy to and from Montana."

NorthWestern owns 35% of Colstrip and is seeking to increase its share from the plant's other five owners.

Hines noted that the utility needs about 365 megawatts of capacity purchases to serve peak demand and worries that customers may experience outages if the utility can't acquire more baseload power.

NorthWestern has requested proposals for 280 megawatts of capacity to begin serving Montana customers in 2023.

Puget Sound officials said they are still looking to sell their share of the plant, despite the setback.

“Unfortunately, the proposed transaction has hit roadblocks that significantly undermine the prospects for successful completion of the transaction. While we are deeply disappointed by this development, we remain committed to finding ways to quickly and efficiently remove coal from our portfolio in compliance with our state’s mandate to have a coal-free energy supply by 2025,” said Ron Roberts, Puget Sound's director of generation and natural gas storage, in a written statement.

Colstrip is co-owned by six utilities: Puget Sound, NorthWestern, Talen, Portland General Electric, Avista and PacifiCorp.

Three of those owners- Puget Sound, Avista and PacifiCorp- have declared their intentions to pull out of plant by around 2027 because it will have lost its value.