HELENA – The Montana Public Service Commission gave final approval Thursday for NorthWestern Energy ratepayers to buy a coal-fired power plant.
It will be the first large-scale power generating plant owned by Montana’s main utility since energy deregulation of the 1990s when the old Montana Power Company was splintered.
The PSC said the Colstrip 4 power plant will give ratepayers a stable cost of power. In the short term, though, prices will not be going down and could even go up a small amount due to the $407 million deal.
But commissioners said in the long run the stable price will be better. The panel pointed to huge price increases the utility has seen buying electricity on the open market.
“I think overall it was a sound decision. It was the first real step of reversing the disastrous policy consequences of deregulation,” said PSC chairman Greg Jergeson. “One only needs to look at what the markets have done since the Legislature said in 1997 that the utilities should rely on the price in the markets for the supply of power of consumers.”
Critics said NorthWestern’s parent company, which owned the plant, was asking ratepayers to pay too much for it.
Commissioner Ken Toole, the lone “no” vote on the panel, said the deal locks Montana ratepayers into using “dirty” coal for about 35 years.
He said that means the main utility may have to pass up cleaner technologies that could become available. And Toole said a potential federal tax on carbon dioxide emissions would also make the energy more expensive for ratepayers than originally forecast.
The Colstrip 4 plant provides about a quarter of the electricity needed by the state’s largest utility. The rest will continue to come from other suppliers, including the other big piece of defunct Montana Power, PPL Montana.
“Our portion of Colstrip 4 will provide our Montana customers with a dedicated and stable source of electric supply,”said Bob Rowe, NorthWestern president and CEO.
The purchase was made possible by 2007 legislation that allowed the utility to get back into the power generation business, something that had been banned since deregulation was adopted.
But Rep. George Groesbeck, D-Butte, said the PSC’s decision was consistent with what the Legislature intended — although only time will tell if the cost of the Colstrip plant will be worth it to consumers.
“I’m hopeful that the PSC made a good decision,” he said. “And I hope deciding to ratebase the Colstrip 4 asset is in the longterm best interest of ratepayers.”