NorthWestern’s latest energy plan is an expensive disaster for Montana
The Laurel Generation Station under construction by NorthWestern Energy as seen on April 14, 2023 (Photo by Darrell Ehrlick of the Daily Montanan)
Every few years, NorthWestern Energy releases its Integrated Resource Plan for Montana. The document outlines how the monopoly utility plans to source and develop the energy to power Montana’s homes, farms, ranches, offices and businesses.
NorthWestern just released its 2023 plan, and it is deeply concerning.
The plan doubles down on the most expensive energy sources. It’s great for the corporation’s shareholders and executives, but it will bring skyrocketing bills for customers and a dangerous expansion of serious, carcinogenic pollutants that risk our health and future prosperity.
NorthWestern releases this plan as it seeks to raise electricity rates for residential customers by 28%. This rate hike is just one more squeeze on the average Montanan who is also facing an affordable housing crisis and imminent property tax increases. The 28% figure was reached in a settlement between NorthWestern and other large corporations and industrial facilities. It’s a sweetheart deal for the big companies whose rates remain largely untouched while residential customers take a huge hit.
Perverse economic incentives are baked into state law for monopoly utilities like NorthWestern. The investor-owned corporation is guaranteed a “Return on Equity” – often as much as 11% – for every dollar it spends on the building, operation and maintenance of power plants. In other words, for every $1 million NorthWestern spends, it gets an extra $110,000 in guaranteed profits from us, its captive energy customers. This is why the corporation chooses coal and gas plants that are the most expensive to build and maintain despite industry trends towards renewables.
In this column, the authors discuss a guarantee on “return on equity” – a concept that regulated monopoly utilities are entitled to a return on investment in exchange for being a publicly regulated utility.
NorthWestern Energy informed the Daily Montanan that it objects to that characterization. As per our policy, we examined the issue more closely and Montana law does not require, guarantee or mandate any specific rate of return. However, after consultation with two previous Public Service Commissioners and examining the statutes closely, we could not find an instance where an approved PSC project did not have a return on equity calculated.
As projects are developed by utilities, they are overseen by the Montana Public Service Commission, which decides the rate of return on equity on a case-by-case basis.
For more information on NorthWestern Energy’s return on its equity, please see the chart below.
Clarification added on Aug. 22, 2023.
The new methane-fired plant NorthWestern is building in Laurel will cost $283 million dollars, creating disturbing financial risks for customers who will be asked to pay for the irresponsible project. The plant’s air quality permit documents that it will emit hundreds of tons of carcinogens and other dangerous pollution every year, threatening the health of residents in Laurel, Billings, and the larger Yellowstone River Valley. These health costs are not accounted for in NorthWestern’s plan, and elected officials should require them to be addressed. The entire premise of this reckless plan demands greater scrutiny from the Public Service Commission, the agency charged to balance the public’s interest with the interests of monopoly energy corporations.
The PSC is soliciting public feedback on NorthWestern’s IRP. The utility should draft a revised plan that incorporates greater use of affordable clean energy sources with independent, expert analysis of the revised document. NorthWestern has a documented history of “cooking the books” to get the conclusions it wants from studies – more fossil fuels that generate expanded profits for shareholders (and higher power bills for us). Cost-effective storage technologies like efficient batteries and pumped-hydro storage make renewable sources reliable at all times despite the industry’s tired bogeyman arguments about sunless, windless days.
In a recent Montana court proceeding, Mark Jacobson, Director of Stanford University’s Atmosphere/Energy Program, testified about the potential savings of transitioning away from fossil fuels to wind, water and solar energy during the next 20 to 30 years. Because 10% of the price we pay for energy comes from costs incurred mining, refining and transporting fuels, this transition would produce tremendous savings while reducing dangerous pollution that harms our health and leads to more frequent and intense climate-fueled floods, droughts and wildfires. The PSC should also require NorthWestern to account for damages to property, croplands and infrastructure from the climate pollution that its current plan will generate.
It’s important that our elected officials hold NorthWestern accountable for a reckless plan that threatens Montana’s future prosperity. We all deserve a clean, affordable, and just energy future that protects the people and places we love, and the technology to achieve that future exists today.
You can submit a comment to the PSC by emailing [email protected] before August 28.
Ita Killeen is a retired physician and ratepayer based in Bozeman. Mary Fitzpatrick is a retired mental health professional, addiction counselor and ratepayer based in Billings. Both are members of Northern Plains Resource Council, a grassroots conservation and family agriculture group.
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