NorthWestern Corp. in its 2019 resource plan expressed skepticism that renewable energy resources can provide the reliable capacity needed to meet Montana's growing energy demand as coal plant retirements sweep the region.
The South Dakota-based company, which operates as NorthWestern Energy in Montana, said in its final resource plan, submitted Aug. 20 to the Montana Public Service Commission and covering a 20-year period, that it is seeking to add up to 400 MW worth of capacity through competitive solicitations.
The capacity includes solar and wind combined with storage, natural gas-fired generation, and other generation technologies including hydropower. The company also proposed building additional facilities at its 144-MW natural gas-fired Dave Gates Generating Station (Mill Creek). The plan did not outline a preferred resource portfolio, saying the company will seek the lowest-cost resources through such procurements.
Adding carbon-free resources to meet demand could cost $523 million more than using natural gas-fired resources, the company said. A recent regionwide analysis, the plan said, found that transitioning to 100% carbon-free resources "would be cost prohibitive."
The new resource plan follows a string of political and legal setbacks for NorthWestern. In early August, a state judge ruled that the company was not complying with a clean energy law that requires it to purchase power from small renewable energy projects. That followed a ruling by the same judge that state regulators acted arbitrarily and unreasonably in slashing the rates NorthWestern pays to such projects. And a controversial bill that would have allowed NorthWestern to pass $75 million in capital costs to ratepayers for increasing its share in a generating unit of the 2,094 MW, coal-fired Colstrip plant failed to pass.
NorthWestern's resource portfolio has 1,631 MW in nameplate capacity, including 538 MW of wind; 485 MW of hydropower; 309 MW of coal; 202 MW of natural gas; and 97 MW of solar. The company said its 2018 energy portfolio produced 61% carbon-free electricity.
NorthWestern relies heavily on imported energy at a time when coal plant closures are sweeping the region. NorthWestern's current resources provide roughly 755 MW of owned peaking capacity, but it must go to the market to purchase 645 MW to meet demand needs, the plan said. Without new peaking capacity, its market exposure would increase to about 725 MW by 2025, according to the company's modeling. Planned regional retirements of 3,600 MW of coal-fired generation including the 2,111-MW Jim Bridger in Wyoming and the 522-MW North Valmy Station in Nevada will cause regional peak energy shortages as early as 2021, the plan said.
"Colstrip is one of our primary resources used to offset variations in wind and load; therefore, NorthWestern cannot simply maintain Colstrip at its maximum generation capability of 222 MW," the plan said.
Colstrip's operator in June announced that two units with a combined generating capacity of 614 MW will retire Dec. 31, which is 30 months before the legally mandated deadline. NorthWestern has a 222-MW share in the plant.
"Continuing to assume the market will always be able to provide customers with sufficient electricity at affordable prices is a reckless approach that could have severe reliability and cost consequences," the plan said.