News & Features

NorthWestern Ordered to Refund Montana Customers $8.2 Million

Montana Public Service Commission said NorthWestern failed to take "prudent actions" to protect customers

HELENA — Montana regulators have ordered NorthWestern Energy to refund customers $8.24 million that the state’s largest power company charged when it had to buy electricity on the open market following a 2013 outage of the Colstrip coal plant.

On a 3-2 vote Tuesday morning, the Montana Public Service Commission said NorthWestern failed to take “prudent actions” to protect customers against the financial exposure from such a massive outage.

The majority of commissioners said the South Dakota-based utility should have taken out insurance or taken legal action against the plant operator to recover some of the costs incurred because of the outage.

The plant was partially out of commission for about six months after equipment malfunctioned after maintenance work at one of its four power-generating units.

Commissioner Roger Koopman was especially critical of NorthWestern’s handling of the debacle.

Too often, he said, consumers are left footing the bill.

“There is this culture of ‘let the customer pay for all of our miscalculations, for our lack of due diligence for our mistakes,'” Koopman told the commission. “I don’t like it.”

Koopman was joined by commissioners Travis Kavulla and Brad Johnson in its order denying NorthWestern from passing on its costs to ratepayers. Commissioners Kirk Bushman and Bob Lake dissented.

Commissioner Travis Kavulla was disturbed, he said, that NorthWestern did not take precautions during maintenance work that could have limited the risk of damage to the power plant.

The company said it was reviewing its options.

“We are carefully evaluating the decision and considering our legal options,” NorthWestern’s vice president and general counsel, Heather Grahame, said in an email.

“It is particularly disappointing that Montana is disallowing these outage related costs when no other state utility commission has found the utility was imprudent as it relates to the 2013 Colstrip Unit 4 outage,” she said.

Company spokesman Butch Larcombe added that it was too soon to begin doing the math to figure exactly how much in credits the utility’s 360,000 electric customers might get as a result of the commission’s order.

Nevertheless, environmental groups and consumer advocates applauded the commission’s decision.

“It’s absolutely a victory for consumers,” said Derf Johnson, the clean water program director for the Montana Environmental Information Center.

Johnson said despite Tuesday’s victory, he remains wary of the continued operation of the Colstrip plant, saying that it was time for NorthWestern to explore cheaper and cleaner sources of energy.

“Coalstrip is an unreliable and expensive source of energy,” said Jenny Harbine, an attorney for Earthjustice who represented conservationists in the commission’s proceedings.

Bushman, whose district encompasses the Colstrip area, said the commission’s decision added “to the uncertainty surrounding coal fired generating units in Montana.” He called it “potentially another nail in Colstrip’s coffin and it’s the ratepayers of Montana who will eventually pay the price if Colstrip closes.”

A spokesman for NorthWestern Energy did not immediately return a phone call and email requesting comment.

The company has previously said that it acted “prudently” as required by state law in passing on its costs to customers.

The commission’s order is expected to be finalized in May.