NorthWestern Energy Announces Intention to Build Laurel Gas Plant Without Pre-Approval From the Public Service Commission

On Tuesday, Sept. 21, NorthWestern Energy submitted a request to withdraw its application for the Laurel gas plant to the Public Service Commission (PSC), citing supply line issues. Hours later, NorthWestern revealed its intention to move forward building the Laurel gas plant without pre-approval from the PSC.

The Montana Environmental Information Center (MEIC) opposes an unusual Montana law that allows NorthWestern to seek pre-approval from the PSC when it wants to build a new electricity generating plant. Pre-approval allows the utility to shift all of the financial costs and risks of new generation assets from its shareholders to its customers before a new plant gets built. MEIC has long argued that NorthWestern should do as other utilities in the country must: Bear the risk of building a new generation asset and only seek approval from regulators to pass those costs to customers after the plant is built – when the costs are known and risks are more certain.

We were disappointed when NorthWestern requested PSC pre-approval for the Laurel gas plant last May. MEIC, along with dozens of other organizations and businesses, intervened so the PSC could scrutinize the proposal and ensure Montanans were not being taken to the cleaners.

Following its petition for withdrawal from the pre-approval process yesterday, we are extremely frustrated with NorthWestern for wasting the PSC and Consumer Counsel’s time and taxpayer-funded resources, as well as the intervenors time and resources on a process that it now wants to abandon. Once again, NorthWestern failed to do its job and consider obvious factors before wasting everyone’s time and money. NorthWestern blames COVID-related supply chain issues, but COVID supply chain issues began a year before the company applied for pre-approval. Now, NorthWestern intends to build the plant and seek approval for passing the costs on to customers through a general rate after the plant is built. Despite this change in process, nothing about the gas plant proposal has really changed: it remains severely flawed, outrageously expensive, remarkably risky, and a climate disaster regardless of whether NorthWestern seeks pre-approval or not.

NorthWestern’s abrupt about-face sounds an alarm for MEIC. NorthWestern was running into serious opposition to its proposal from all corners because of many factors: the application was incomplete; critical information was withheld; the company failed to include important costs (such as the cost of a redesigned pipeline); it refused to account for price volatility in gas markets; and the price tag was outrageous. None of those problems disappear with NorthWestern’s proposal to withdraw its pre-approval application and move forward with building the plant.

The good news is that NorthWestern’s shareholders will be responsible for the company’s poor investment and risky behavior. When the company returns to the PSC requesting permission to charge its customers for the facility, the flaws will remain and the shareholders will hopefully remain responsible for this misguided, expensive project. MEIC will almost certainly be involved in any request by NorthWestern to add the proposed gas plant into the rate base. Montanans should be concerned about NorthWestern’s erratic behavior and its failure to plan for obvious challenges.

Not only that, but NorthWestern’s reliance on this plant will only make the climate crisis worse. As a recent scientific analysis showed, the U.S. must decrease its reliance on gas by 3% every year if we are to hold temperature increases to 1.5ºC as was agreed to in the Paris Accord. Increased reliance on gas – which is composed of the highly potent greenhouse gas, methane – is exactly the opposite of what is needed to solve the climate crisis.

At the end of the day, NorthWestern customers deserve to trust that their energy provider will not try to pass on costs for dangerous infrastructure and stranded assets down the road.

MEIC remains opposed to the Laurel gas plant due to its cost, the impact of gas on the climate and public health, and NorthWestern’s lack of transparency in this process.