Hydro History Book
Butte, Mont. – Sept. 21, 2021 – NorthWestern Corporation d/b/a NorthWestern Energy (Nasdaq: NWE). A shortage of critical peak capacity electric resources is jeopardizing reliability in the Western United States. In Montana, exposure to volatile market prices is also an increasing risk to affordable service for NorthWestern Energy’s customers.
NorthWestern Energy intends to withdraw our application for approval for new capacity resources with the Montana Public Service Commission to accelerate the construction of the 175-megawatt Laurel Generating Station natural gas plant. The upheaval in the construction market and, specifically, timely availability of critical components and escalating labor and construction costs due to the COVID-19 pandemic, necessitates the flexibility to expend capital and make commercial decisions in advance of the timeline established by the Montana PSC approval docket. More importantly, however, the accelerated timeline should allow the plant to serve our Montana customers during the 2023-2024 winter season, perhaps even earlier than would otherwise be the case.
“NorthWestern Energy negotiated a very favorable price for the plant construction, however the worldwide pandemic caused supply-chain disruptions and contributed to labor shortages across all industries, including the energy sector, that were not fully anticipated during contract negotiations,” said NorthWestern Energy CEO Bob Rowe. “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.”
“Montana Public Service Commission review before a large investment in a major supply resource benefits customers and the company by ensuring that the Commission agrees with the company’s approach to meeting its responsibilities to its customers. 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 Energy General Counsel and Vice President Regulatory and Federal Government Affairs Heather Grahame. “We sincerely appreciate the Montana Public Service Commission’s professional and timely management of this important case.”
NorthWestern Energy has made the difficult decision to proceed without prior Commission review in order to accelerate the commercial operation date of the Laurel Generating Station and to take full advantage of the favorable supply and labor prices in existing contracts.
The Laurel Generating Station, along with the 20-year contract with Beartooth Energy Storage for the 50 megawatt Beartooth Battery project near Billings, Montana and a five-year agreement with Powerex for 100 megawatts of firm capacity and energy products from the BC Hydro system, were selected from the request for proposals as the lowest cost resources to reduce a portion of the deficit of 24/7 resources serving NorthWestern Energy’s Montana customers. 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 Energy filed a motion with the Montana Public Service Commission to suspend the docket timeline for the approval for capacity resources filed in the spring of 2021. NorthWestern Energy intends to withdraw the application for approval of the Laurel Generating Station and instead anticipates seeking a review and recovery of the asset through a general rate filing after completion. NorthWestern Energy is evaluating whether to continue the application for approval of the Beartooth Battery project contract.
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About NorthWestern Energy (Nasdaq: NWE)
NorthWestern provides electricity and / or natural gas to approximately 743,000 customers in Montana, South Dakota, and Nebraska. We have generated and distributed electricity in South Dakota and distributed natural gas in South Dakota and Nebraska since 1923 and have generated and distributed electricity and distributed natural gas in Montana since 2002. More information on NorthWestern is available on the company’s website at www.northwesternenergy.com.