NorthWestern Energy moves back into power supply

NorthWestern Energy moves back into power supply

Company head says it could provide better price stability

Tim Leeds

The president and CEO of the power company that supplies much of this region with electricity said his company is moving back to owning some of its own supply, following 10 years of leaving that business following utility deregulation in Montana.

"We are owning resources again, and, over the long term, that will provide more stability, " Bob Rowe of NorthWestern Energy recently said during a meeting in Havre.

Rowe and other representatives of NorthWestern Energy were in Havre during a statewide tour to discuss the company's plan for investing additional hundreds of millions of dollars in the next seven years to upgrade and improve its distribution infrastructure in its electricity and natural gas business.

But Rowe, who served on the state Public Service Commission from 1993 to 2004 and chaired the commission, commented during the meeting that another move is to start supplying part of its own electricity and natural gas for its portfolio.

"We are doing other things to manage supply costs and move back somewhat more in the direction of owned resources, " Rowe said.

He said that he opposed the deregulation that the state Legislature approved in 1997, which allowed the long-time electrical and natural gas utility Montana Power Company to sell off almost all of its supply-side property, then to sell the transmission side and remaining supply property to NorthWestern Energy.

The stated intent of the deregulation was to open competition and allow consumers to decide from whom to buy their electricity.

"Is anyone buying their own electricity now? " Rowe asked his Havre audience, adding, "So that worked out really well, " when no one responded.

Montana Power sold its transmission network to NorthWestern Energy and transformed into Touch America, a telecommunications company focusing on creating a huge fiber-optic network. As the telecommunications market bubble burst, Touch America went into bankruptcy in 2003.

Rowe said he was an opponent of the deregulation. It may have seemed like a good idea, because supply prices had been fairly stable at that point.

"But (the prices) came right back up, as others of us thought they would, " he said.

Rowe, who took over at NorthWestern in 2008, said a push for the company now is to get back into owning some of its own supply.

He added that part of that — a recent purchase of part of a gas field — took place right in this area.

"Montana Power was one of the only utilities in the country that owned gas production (before deregulation,) " he said. "We still own storage and a gathering system, and we're now getting our toe back in gas production. "

Claudia Rapkoch, spokeswoman for NorthWestern, said that was approved by the Montana Legislature in a past session.

"We asked for the ability to again own a portion (of our supply) as part of our regulated supply portfolio, to balance out supply, " she said.

The purchase was of part of the production in the Battle Creek formation in Blaine County. It now accounts for about 2 percent of the company's supply.

NorthWestern is not interested in speculative or exploratory ownership, she added. The company will continue to watch for gas production that meets its criteria of providing stable, proven supply to help balance out its portfolio, she said.

Rowe said another step NorthWestern has taken is bringing part of the production of Colstrip 4 Unit at Billings back into its Montana supply portfolio.

That electricity, the last remnant of Montana's supply, had been being sold to Los Angeles, he said.

"Now it's back in our rate base, " he said.

Another new supply is the gas-fired Mill Creek station near Anaconda, which was preapproved by the Public Service Commission. Rowe said the project was completed and came in about $20 million under budget.

Rapkoch said NorthWestern is in the process of applying to have the Mill Creek supply, now being used on a temporary basis, brought in on a permanent basis.

She added that part of the goal, including with the Mill Creek property, is to provide a stable supply. With increasing use of wind energy, which has a highly variable output rate, additional sources of energy are being used to balance the portfolio and meet stringent requirements on the transmission system.

The president and CEO of the power company that supplies much of this region with electricity said his company is moving back to owning some of its own supply, following 10 years of leaving that business following utility deregulation in Montana.

"We are owning resources again, and, over the long term, that will provide more stability, " Bob Rowe of NorthWestern Energy recently said during a meeting in Havre.

Rowe and other representatives of NorthWestern Energy were in Havre during a statewide tour to discuss the company's plan for investing additional hundreds of millions of dollars in the next seven years to upgrade and improve its distribution infrastructure in its electricity and natural gas business.

But Rowe, who served on the state Public Service Commission from 1993 to 2004 and chaired the commission, commented during the meeting that another move is to start supplying part of its own electricity and natural gas for its portfolio.

"We are doing other things to manage supply costs and move back somewhat more in the direction of owned resources, " Rowe said.

He said that he opposed the deregulation that the state Legislature approved in 1997, which allowed the long-time electrical and natural gas utility Montana Power Company to sell off almost all of its supply-side property, then to sell the transmission side and remaining supply property to NorthWestern Energy.

The stated intent of the deregulation was to open competition and allow consumers to decide from whom to buy their electricity.

"Is anyone buying their own electricity now? " Rowe asked his Havre audience, adding, "So that worked out really well, " when no one responded.

Montana Power sold its transmission network to NorthWestern Energy and transformed into Touch America, a telecommunications company focusing on creating a huge fiber-optic network. As the telecommunications market bubble burst, Touch America went into bankruptcy in 2003.

Rowe said he was an opponent of the deregulation. It may have seemed like a good idea, because supply prices had been fairly stable at that point.

"But (the prices) came right back up, as others of us thought they would, " he said.

Rowe, who took over at NorthWestern in 2008, said a push for the company now is to get back into owning some of its own supply.

He added that part of that — a recent purchase of part of a gas field — took place right in this area.

"Montana Power was one of the only utilities in the country that owned gas production (before deregulation,) " he said. "We still own storage and a gathering system, and we're now getting our toe back in gas production. "

Claudia Rapkoch, spokeswoman for NorthWestern, said that was approved by the Montana Legislature in a past session.

"We asked for the ability to again own a portion (of our supply) as part of our regulated supply portfolio, to balance out supply, " she said.

The purchase was of part of the production in the Battle Creek formation in Blaine County. It now accounts for about 2 percent of the company's supply.

NorthWestern is not interested in speculative or exploratory ownership, she added. The company will continue to watch for gas production that meets its criteria of providing stable, proven supply to help balance out its portfolio, she said.

Rowe said another step NorthWestern has taken is bringing part of the production of Colstrip 4 Unit at Billings back into its Montana supply portfolio.

That electricity, the last remnant of Montana's supply, had been being sold to Los Angeles, he said.

"Now it's back in our rate base, " he said.

Another new supply is the gas-fired Mill Creek station near Anaconda, which was preapproved by the Public Service Commission. Rowe said the project was completed and came in about $20 million under budget.

Rapkoch said NorthWestern is in the process of applying to have the Mill Creek supply, now being used on a temporary basis, brought in on a permanent basis.

She added that part of the goal, including with the Mill Creek property, is to provide a stable supply. With increasing use of wind energy, which has a highly variable output rate, additional sources of energy are being used to balance the portfolio and meet stringent requirements on the transmission system.