BILLINGS, Mont. (AP) — NorthWestern Energy wrongly charged customers at least $8.5 million after a 2013 power plant outage forced it to buy electricity on the open market, attorneys for Montana consumers and environmental groups argued Tuesday before state regulators.
The case centers on costs incurred by NorthWestern after the huge Colstrip coal plant was partially idled for more than six months for repairs beginning in July 2013.
A hearing on the rate dispute began Tuesday before the state Public Service Commission and could last several days.
Representatives of the South Dakota-based utility said it followed state regulations by passing along electricity replacement costs to its 350,000 Montana customers.
Customers who paid for the replacement power continued to be charged for NorthWestern's investments in Colstrip. NorthWestern is a partial owner of the 2,100 MW southeastern Montana coal plant, one of the largest in the West.
Earthjustice attorney Jenny Harbine said NorthWestern should have known about potential problems at the plant.
Instead, it ignored such concerns and falsely portrayed Colstrip as "at least as good as when it was new, if not better" during a prior commission session, according to panel Vice Chairman Travis Kavulla.
Kavulla was the sole commissioner to vote against last year's interim approval of a rate increase to cover the replacement power costs, which commission staff estimated at more than $11 million
The Montana Consumer Counsel and Harbine's clients, including the Montana Environmental Information Center and Sierra Club, want the money returned to customers.
They contend that NorthWestern should have taken out insurance against a possible Colstrip outage or sued plant operator PPL Montana and maintenance contractor Siemens to recover the cost of getting power elsewhere.
The outcome of the dispute hinges on whether the utility acted prudently as required under state law when it passed along the outage costs to customers.
NorthWestern spokesman Butch Larcombe said that's just what the company did.
"With any sort of (power) generation facility, you're going to have time when it's not operating," Larcombe said. "You have to go get electricity somewhere else. That's what the laws and regulations provide."
NorthWestern considered purchasing an insurance policy that would have covered the outage, Larcombe said, but decided it would cost too much. The utility's contracts preclude it from suing PPL or Siemens, he added.
PPL has since been spun off to form Talen Energy.
Northwestern customers were left out of decisions about insurance coverage and legal liability but nevertheless ended up footing the bill, said Montana Consumer Counsel attorney Monica Tranel.
NorthWestern "is required to use the same vigor to protect ratepayers as it does to protect its shareholders," Tranel said. "The job of this commission is to make this utility bear the risk of its decisions."
The five-member panel will determine if NorthWestern was entitled to recover its costs from the outage and also how much that should be, commission spokesman Eric Sell said.
The panel is chaired by Republican Brad Johnson, who recently announced he is running for Montana governor.