Public Service Commission: NorthWestern attempted to avoid inspection

The leadership of the Public Service Commission (PSC) has called on the Federal Energy Regulatory Commission (FERC) to examine NorthWestern Energy for attempting to bypass legal oversight in its handling of shares at the coal-fired Colstrip power plant.

According to the PSC, NorthWestern and NW Colstrip have used a scheme to skirt Montana law and avoid FERC review of their transactions.

In July 2024, NorthWestern Energy revealed plans to purchase Colstrip shares from Puget Sound Energy, promising that customers would see benefits beginning January 2026. However, the utility later created a subsidiary, NorthWestern Colstrip 370 PuLLC, and directed the newly acquired shares to this entity, which it claims falls outside PSC jurisdiction.

NorthWestern explained that the Puget purchase agreement was transferred to the subsidiary, which will acquire the shares directly on January 1, 2026, with the parent company not taking ownership. In October, the subsidiary proposed to FERC to sell electricity from the new shares on the wholesale market until the existing customers require the capacity.

The PSC responded by filing a motion to intervene in the federal docket, listing multiple objections. Signed by PSC President Jeff Welborn and Vice President Jennifer Fielder, the filing asserts that NorthWestern Energy, as a public utility, likely violates Montana law by transferring assets without PSC approval. It also contends that the transfer of assets to the subsidiary without FERC authorization breaches federal law. The PSC added that the subsidiary appears to be selling energy it neither legally owns nor controls without proper federal approval.

Earlier, NorthWestern argued that its plan shields current customers from costs and liabilities linked to the new shares and allows the utility to offset operational expenses through wholesale sales, a claim that a conservation watchdog said warrants scrutiny. The company also stated that asset transfer issues are beyond the scope of its FERC filing, which focuses solely on wholesale sales rates.

The PSC highlighted a failed 2025 Montana legislative bill as relevant, noting it sought to exclude legally separate entities created by public utilities from the definition of public utilityprecisely the situation NorthWestern is now citing. Despite the bills failure, NorthWestern continued its efforts to move the transfer out of state oversight.

The PSC argued that NorthWesterns attempt to sell on the wholesale market without requesting state approval is an effort to dodge both state and federal scrutiny regarding ownership and potential legal violations. The commission called the transfer strategy a deliberate maneuver to circumvent Montana regulation and legislative oversight.

The filing also criticized the timing of NorthWesterns transfer to the subsidiary, saying directing Colstrip shares to the new entity before acquisition does not exempt the deal from federal authority, calling it the subsidiarys most questionable argument. The PSC concluded that NorthWesterns intent has consistently been to evade scrutiny from both FERC and the state.

In its motion, the PSC requested that FERC reject NorthWesterns filings and launch an investigation, emphasizing that Montana will pursue the matter independently as well. PSC spokesperson Alana Lake noted that regulatory staff quickly identified the key issue at FERC, enabling a timely intervention. We are hopeful that FERC will acknowledge and address our concerns, Lake said.

Analysis: Montana PSC's Push for Scrutiny of NorthWestern Energy’s Colstrip Share Deal

The ongoing dispute between the Public Service Commission (PSC) of Montana and NorthWestern Energy highlights the tension surrounding legal oversight in the state's energy sector. The PSC has raised serious concerns about NorthWestern's attempt to bypass both state and federal regulations in its dealings with shares from the Colstrip power plant. This move could potentially undermine public utility oversight and lead to a lack of accountability in energy transactions. As such, the PSC is urging the Federal Energy Regulatory Commission (FERC) to investigate the situation and ensure compliance with both state and federal laws.

NorthWestern's creation of a subsidiary, NorthWestern Colstrip 370 PuLLC, to handle the newly acquired Colstrip shares from Puget Sound Energy raises red flags. While the utility argues that this strategy shields current customers from costs, the PSC claims it is a deliberate attempt to sidestep state jurisdiction and avoid scrutiny by the FERC. By transferring assets to an entity it believes is not subject to PSC oversight, NorthWestern is potentially violating Montana's laws that require public utility transactions to be reviewed and approved by the state commission.

The PSC's filing highlights that the transfer of these shares, and the subsidiary's proposal to sell electricity on the wholesale market before customers need it, bypasses crucial regulatory procedures. This action not only threatens the integrity of state oversight but also risks legal violations on the federal level. The PSC's intervention underscores its concern that NorthWestern's maneuvers could set a dangerous precedent for how utilities operate within Montana's energy landscape.

Ultimately, this issue is not just about regulatory oversight but also about ensuring that the interests of Montana's residents are protected. The PSC's proactive stance in challenging this deal is an effort to maintain transparency and accountability within the state's energy market. Whether or not FERC will take the necessary action to investigate NorthWestern's tactics remains to be seen, but the PSC's commitment to upholding state laws will likely continue to shape this ongoing debate.

Sources:

• Public Service Commission: NorthWestern tried to evade scrutiny

Author: Maya Henderson
Maya Henderson is a journalist focused on technology and startups. She has experience in leading IT publications and excels at conducting interviews and creating visual content.