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Tom Woods Says No to Northwestern’s Bad Deal on Colstrip

Here’s my take on the “Colstrip for a Buck Bill” it will likely be up in FRET committee on Monday.

Best, Rep Tom Woods

As one of your state representatives, I need to let you know that a bill in the Legislature, Senate Bill 331, will allow Northwestern Energy (NWE) to make a bad deal and then stick it to the ratepayers for hundreds of millions of dollars. What really sets my hair on fire with the situation is that this isn’t the first time Northwestern Energy has bilked ratepayers through a lousy deal. It’s not even their first bad deal over Colstrip! There’s a history of this behavior.

When Northwestern Energy purchased a 30 percent share in Colstrip 4, it paid about $187 million. When they went before the Montana Public Service Commission, they claimed $407 million to be the amount which ratepayers should reimburse them for Colstrip 4. Again, the actual cost to the company was $187 million, but the amount which ratepayers must pay the company back for the purchase is $407 million.

NWE shouldn’t have done that and the PSC shouldn’t have allowed it, but who do we blame for that? My response is to quote Shakespeare, “A pox on both your houses.” It also bears mentioning that one of the PSC commissioners weighing in on that decision became a NWE executive when he left office. That was also legal, but not right. Move on, folks, nothing to see here.

These boondoggles seem to be part of a pattern. A few years later, in 2014, Northwestern Energy purchased the hydroelectric dams from a company called PPL and paid a price about $270 million over their actual value. The “extra” valuation of $270 million was justified as a “cost of carbon” premium. Never mind that we don’t tax carbon. The company doesn’t mind since it is it is being paid real dollars for that imaginary carbon tax valuation.

SB 311 is the latest train wreck to come down the Northwestern Energy track. SB 331 is written to allow Northwestern Energy to take over a larger portion of the Colstrip coal-fired power plant for the grand total of one dollar. Why would the current owners agree to such a deal? It’s because Colstrip is in trouble and now is a good time for the current majority owners to jump ship. Their supplier of coal for the plant is in bankruptcy and although their mine may remain open for another year or more, Colstrip will have to pay loads of cash to revamp for a different type of coal when they change supplier. By the way, should they buy their coal from Wyoming like they want to, the state will lose a lot of tax revenue.

So why would Northwestern want to take on an expensive lemon like Colstrip? That’s the dirty secret of this bill. SB 331 guarantees NWE a full return on the value of the plant, amortized over 30 years, regardless of when they close it. Moreover, ongoing costs for the new ownership portion would be passed directly on to customer bills, with no PSC oversight or prudency review. Only after they exceed $40 million in costs over a five-year period will the PSC be able to step in and disallow some costs.

Simply put, when SB 311 passes, the risks and the costs will once again devolve to Northwestern Energy customers. We will lose again. Contact your legislators and let them know that you’re concerned.




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Nathan Kosted

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