The energy company, Montana’s largest regulated monopoly utility, says that serving these new “large load” customers “can bring significant benefits” to all of its customers by supporting future capital investments and infrastructure improvements. In essence, NorthWestern is saying that they’ll be making money off these new data centers and will use that money to improve the energy system in Montana.
The Missoulian has previously reported that two data center companies have announced plans and signed letters of intent to buy as much as 400 megawatts of electricity, combined between the two of them, by the year 2030.
That’s enough power to supply nearly 320,000 homes for a year.
One of the companies has refused to allow its name to be released, meaning it’s probably connected to the government somehow. The other company is called Atlas Power, based in Butte. Neither company has said what exactly the power will be used for, whether it’s for AI processing or cryptocurrency or cloud storage.
All of the power to those two data centers will be supplied from the Colstrip coal-fired power plant in Montana starting in the year 2026.
Starting on Jan. 1 of that year, NorthWestern Energy will acquire, at no cost, 592 megawatts of generating capacity shares in the Colstrip coal-fired electric generation plant from two energy companies in Washington.
QUESTIONS
The Montana Public Service Commission in February sent an inquiry to NorthWestern Energy, asking the company to prove that supplying that much energy to two customers will not adversely affect other customers or the energy grid.
On March 4, NorthWestern Energy’s vice president and chief financial officer Crystal Lail provided a four-page response.
“Our expanding resource portfolio, including substantial new tranches of Colstrip, brought NorthWestern an opportunity to reassess its historic short portfolio and the ability to serve new load,” Lail wrote. “NorthWestern Energy is uniquely positioned to attract new large load customers. When a prospective customer chooses to locate a new facility in our service territory, the addition of their fully bundled load can bring significant benefits to all our customers. Sales to these new large load customers can support future capital investments and infrastructure hardening for the provision of safe, reliable, and economic service to all customers.”
Lail said that the rapid growth of data centers across the country has shown a need for timely action to manage these substantial and immediate energy demands.
“Additionally, attracting new large load customers to our service territory can stimulate economic growth by creating new jobs and increasing investment in our communities,” Lail continued. “This growth produces a ripple effect, leading to enhancements in community infrastructure — including schools, roads, parks, and other public resources — that enrich the daily lives of Montanans.”
But coal-fired power releases the CO2 that is responsible for throwing Earth’s weather systems into disarray, meaning hotter, dryer summers, more frequent and intense weather events and less snowpack in the winter, harming wildlife and agriculture.
According to the Montana Environmental Information Center, the two coal-burning units at Colstrip have the third highest and overall highest rates of toxic air pollutant emissions rates in the nation, respectively.
None of that is addressed in NorthWestern’s letter to the Public Service Commission.
Instead, Lail focused on the legal and economic arguments for why NorthWestern should be allowed to sell power to the two data centers.
Lail wrote in her response that Montana law “does not require new large load customers to obtain Commission approval to receive electric supply service from NorthWestern Energy.”
Lail noted that a law passed in 2007 by the Montana Legislature eliminated “customer choice for electric supply” in Montana, which is why NorthWestern is a monopoly utility and why most Montanans don’t really have a choice of which company supplies their power. That 2007 law marked the end of the “deregulation” era in Montana.
As a result, Lail said that NorthWestern Energy has an obligation to serve new large loads located in its service territory, such as data centers, that did not exist and were not receiving supply from anyone on Oct. 1, 2007.
“These new customers will become electric supply customers of NorthWestern Energy because customer choice for supply no longer exists in Montana,” she wrote.
Lail also said that NorthWestern Energy would like to pursue a collaborative approach to consider the effects of serving data centers.
“We recognize the opportunities and challenges that new large loads present, particularly with the rapid emergence of data centers and other large-scale energy consumers,” Lail wrote. “It is our shared priority with the Commission to protect existing customers from potential adverse effects while moving quickly to capture the benefits from large load customers.”
She noted that many other jurisdictions are addressing the introduction or increased number of large load customers or data centers to their service areas, developing strategies that balance growth with customer protection.
“These (strategies in other places) can provide guidance as NorthWestern Energy, the Commission, and stakeholders collaboratively explore options tailored to Montana — solutions that promote economic development while protecting existing customers,” Lail said.
She then noted that NorthWestern’s resource portfolio is adequate to provide service to the two new large load data center customers.
“Given Montana’s potential for additional economic growth from new large load customers, we believe it is important to consider enhancing electric tariffs and regulatory processes for additional new large load customers,” Lail said. “By doing so, we can promote economic development while safeguarding existing customers — an important next step in capturing future opportunities for the state of Montana.”
Lail said that in a future filing, NorthWestern expects to propose modifications to the tariff rules already in place. In essence, that means changing the price that NorthWestern can charge for delivering service.
Lail said that will allow stakeholders, including the Commission, NorthWestern Energy, the Montana Consumer Counsel and other interested entities to provide input on managing future large customer load growth.
“Speed to market to attract economic development to Montana is critical and we are committed to being a strong partner with the Commission to address these issues,” Lail concluded.
The PSC’s agenda last week did not include any discussion about NorthWestern’s response, but watch the Missoulian for coverage when the Commission does take that matter up.
Montana Public Service Commission president Brad Molnar said in a phone call with the Missoulian that he would not be commenting on the issue right now, noting that the discussion between the PSC and NorthWestern would probably involve the legal teams for both sides for the foreseeable future.
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