NorthWestern Energy Gains Colstrip Majority, Raises Oversight Concerns

NorthWestern Energy moved this month to secure approval for how it will use newly acquired ownership at the Colstrip Steam Electric Station, a coal fired plant whose six owner companies together supply roughly 1,480 megawatts of capacity. The utility currently holds 222 megawatts, about 15 percent of the plant. With the planned transfers it will add Avista’s 222 megawatts and Puget Sound Energy’s 370 megawatts, increasing its stake to 55 percent beginning January 1, 2026.

Company filings show NorthWestern paid no direct cash for either stake, reflecting regulatory and legal limits that prompted Avista and Puget Sound Energy to exit coal generation to comply with Washington state rules. NorthWestern said it will use the Avista share the same way it uses its current Colstrip share, serving Montana retail customers. The Puget Sound Energy share will be held by a new subsidiary, NorthWestern Colstrip 370Pu LLC, and offered to the wholesale market through a planned arrangement with Mercuria Energy America.

NorthWestern argues that placing the 370 megawatts in a subsidiary shields Montana ratepayers from roughly $30 million in operating costs until in state demand grows enough to justify using that power locally. The company has taken the wholesale sales proposal to the Federal Energy Regulatory Commission because FERC oversees interstate transmission and wholesale sales, while the utility says the subsidiary is not part of the regulated utility under state jurisdiction.

That strategy drew pushback. The Montana Public Service Commission filed to intervene at FERC and signaled it is evaluating a separate docket and possible waiver request that could be considered in January. The Montana Environmental Information Center also objected, questioning whether NorthWestern has shown a need for both new ownership shares and raising worry that moving decisions to a federal forum could reduce state oversight of long term costs and environmental liabilities.

For Lewis and Clark County residents the dispute matters because Colstrip ownership changes affect local utility risk and potential rate pressure over time. Regulators will weigh whether the subsidiary approach truly protects ratepayers or instead shifts costs and decision making outside routine state review. FERC could act more quickly on the initial filings while the state commission follows a separate schedule, leaving a period of regulatory uncertainty as the ownership transition takes effect at the start of next year.