Montana Public Service Commission action on Colstrip misaligned with Montana's severe capacity shortage

NorthWestern Energy (Nasdaq: NWE) faced a setback as the Montana Public Service Commission imposed a $5.7 million penalty on its Colstrip operations through the Power Costs and Credits Adjustment Mechanism (PCCAM).

Rhea-AI Summary

NorthWestern Energy (Nasdaq: NWE) faced a setback as the Montana Public Service Commission imposed a $5.7 million penalty on its Colstrip operations through the Power Costs and Credits Adjustment Mechanism (PCCAM). This decision complicates the company's efforts to acquire additional interest in Colstrip Unit 4 for $0.50, amidst a growing capacity shortage. Additionally, the Commission disallowed $3.8 million in costs related to regulatory changes in the PCCAM. NorthWestern plans to review the Commission's written order for further insights.

Positive

• None.

Negative

• Imposition of a $5.7 million penalty on Colstrip operations.
• Inability to recover costs for purchasing power during Colstrip's unavailability.
• Disallowance of $3.8 million costs under the PCCAM due to regulatory changes.

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BUTTE, Mont., Oct. 27, 2020 /PRNewswire/ -- NorthWestern Corporation d/b/a NorthWestern Energy (Nasdaq: NWE).  Today the Montana Public Service Commission handed down another decision hostile to Colstrip by voting to penalize NorthWestern Energy's Colstrip operations by $5.7 million through the annual Power Costs and Credits Adjustment Mechanism (PCCAM).  It is particularly disappointing given this disallowance is on top of the risk sharing mechanism that is already part of the PCCAM design.

According to John Hines, Vice President of Energy Supply, "The Commission's most recent public comments coupled with their repeated refusals to allow NorthWestern to recover costs to purchase power for its customers when Colstrip is not available make it very difficult to purchase the proposed additional interest in Colstrip Unit 4 for $0.50. The Commission's treatment of Colstrip is not aligned with NorthWestern's critical need to address a severe and growing capacity shortage in the state."

Colstrip Unit 4 was taken out of service in mid-2018 to ensure that it could burn fuel cleanly and remain in compliance with emissions standards. The Commission's decision also disallowed an additional $3.8 million of costs related to the prorated application of a change in state law that eliminates the deadband component of the PCCAM. NorthWestern will evaluate the Commission's written order once it is issued.

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About NorthWestern Energy (Nasdaq: NWE)
NorthWestern Corporation, doing business as NorthWestern Energy, provides electricity and / or natural gas to approximately 734,800 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 Energy is available on the company's website at www.northwesternenergy.com.

View original content:http://www.prnewswire.com/news-releases/montana-public-service-commission-action-on-colstrip-misaligned-with-montanas-severe-capacity-shortage-301161221.html

SOURCE NorthWestern Energy

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What penalty did the Montana Public Service Commission impose on NorthWestern Energy's Colstrip operations?

The Montana Public Service Commission imposed a $5.7 million penalty on NorthWestern Energy's Colstrip operations.

Why is NorthWestern Energy struggling to acquire Colstrip Unit 4?

NorthWestern Energy is struggling to acquire Colstrip Unit 4 due to the Commission's refusal to allow cost recovery for power purchases when Colstrip is unavailable.

What additional costs were disallowed by the Commission related to NorthWestern Energy?

The Commission disallowed an additional $3.8 million in costs related to a change in state law affecting the PCCAM.

What is the significance of the capacity shortage in Montana for NorthWestern Energy?

The capacity shortage in Montana is critical for NorthWestern Energy as it affects their ability to secure additional resources and manage supply effectively.