NorthWestern to skip PSC approval for $250M Laurel plant

In a bid to fast-track construction of a $250 million gas-fired plant in Laurel and avoid higher labor costs, NorthWestern Energy said Tuesday it intends to withdraw its request for approval by the Montana Public Service Commission.

Instead, the monopoly utility will move forward with plans to build the Laurel Generating Station without review by regulators or scrutiny from third parties who have intervened in the docket. A news release from the energy company characterized the decision as “difficult” but notes the 175-megawatt plant could be online in time for the 2023-2024 winter season.

“Our decision to withdraw the approval application is based on the immediate need for flexibility due to unanticipated conditions in the construction market,” said NorthWestern’s Heather Grahame, general counsel and vice president for regulatory and federal government affairs, in a statement from the utility.

NorthWestern CEO Bob Rowe said the utility negotiated a favorable price for construction, but the pandemic led to supply chain disruptions and labor shortages: “In addition, energy market conditions continue to trend unfavorably for our Montana customers, with very high market prices, such as those experienced in July, during periods of high regional energy demand.”

The utility filed a motion Tuesday to suspend the procedural schedule with the Public Service Commission, which regulates monopoly utilities in Montana. In the filing, NorthWestern said it planned to withdraw its request that the commission approve the acquisition of the Laurel Generating Station.

“We are evaluating whether to proceed with the approval process of the Beartooth Battery Energy Storage Agreement,” the filing said of the 20-year contract for 50 megawatts of storage near Billings. “We anticipate filing a formal pleading as expeditiously as possible to clarify NorthWestern’s intent.”

Originally, NorthWestern estimated the cost of the new plant to residential customers at roughly $80 a year, or $6.64 a month. Tuesday, NorthWestern said it wasn’t immediately clear if skipping the approval process would change the cost to consumers.

PSC staff attorney Lucas Hamilton said the commission could not comment on the move by NorthWestern given it’s related to active litigation. However, he anticipated commissioners could take up the matter as early as their Oct. 5 meeting.

Prior to NorthWestern’s news release noting an accelerated timeline for the Laurel project, the Montana Environmental Information Center touted NorthWestern’s plans to withdraw its application as “a victory for clean air and clean energy.” The MEIC opposes the use of fossil fuels in part for cost and also for their impact on the climate and effects such as drought and wildfires.

“We’re relieved that NorthWestern is withdrawing the application,” said the MEIC’s Anne Hedges in a statement. “It’s time for Montana to move forward with affordable, clean energy.”

Initially, NorthWestern estimated the plant would be online by early 2024. It said Tuesday that without PSC review, it could be running in time for winter 2023 -2024, “perhaps even earlier than would otherwise be the case.”

NorthWestern at times needs to buy 40 percent to 50 percent of its energy needs and has estimated its deficit at 363 megawatts at peak demand. In the news release, NorthWestern noted the Laurel project, Beartooth storage, and five-year agreement with Powerex for 100 megawatts as the “lowest cost resources” from an earlier request for proposals that will reduce its deficit.

“The Laurel Generating Station will be part of a portfolio of resources that is dominated by hydro and wind, with smaller amounts of coal and natural gas, and several hundred megawatts of solar anticipated over the next several years,” NorthWestern said in the news release.