BILLINGS, Mont. — NorthWestern Energy makes its case to state regulators Tuesday in a dispute over at least $8.5 million that the utility collected from Montana customers after a 2013 power plant outage forced it to buy electricity on the open market.
The charges offset costs for the replacement power NorthWestern bought after the Colstrip coal plant was partially idled for more than six months for repairs beginning in July 2013, the South Dakota-based utility said in filings with the Montana Public Service Commission.
Customers who paid for the replacement power continued to be charged for NorthWestern’s investments in Colstrip. NorthWestern is a partial owner of the southeastern Montana coal plant and has more than 350,000 customers in Montana.
The Montana Consumer Counsel and environmental groups want the money returned to customers. They argue that NorthWestern should have taken out insurance against a possible Colstrip outage, or sued plant operator PPL Montana to recover the cost of getting power elsewhere.
“As rate payers, we’re already paying for the cost of that unit to be sitting there, not generating power,” said Consumer Counsel attorney Monica Tranel. “Asking us to pay for replacement power above and beyond that, because of an outage that was caused by someone working on (the Colstrip plant) was problematic.”
The Montana Environmental Information Center and Sierra Club also filed challenges to a petition from NorthWestern that would allow its previous charges to customers.
The case comes down to whether the utility acted prudently as required under state law when it passed the replacement power costs along to its customers.
NorthWestern spokesman Butch Larcombe said that’s just what the company did.
“Most people don’t understand this, but with any sort of (power) generation facility, you’re going to have time when it’s not operating. That’s true for wind turbines or natural gas or a coal plant. You have to go get electricity somewhere else,” Larcombe said. “That’s what the laws and regulations provide.”
NorthWestern considered purchasing an insurance policy that would have covered the outage, Larcombe said, but decided it would cost too much.
The utility’s contracts preclude it from suing PPL Montana over the 2013 outage, Larcombe said. PPL has since been spun off to form Talen Energy.
A hearing on the dispute that began Tuesday was expected to take three to four days, Public Service Commission spokesman Eric Sell said.
The five-member commission will determine if NorthWestern was entitled to recover its costs from the outage and also how much that should be, Sell said. The panel is chaired by Republican Brad Johnson, who recently announced he is running for Montana governor.
This article was written by Matthew Brown from The Associated Press and was legally licensed through the NewsCred publisher network.