Montana Supreme Court Again Rebukes NorthWestern Energy on Clean Energy Projects

Once again, the Montana Supreme Court has ruled NorthWestern Energy’s hostile approach to clean energy was a violation of the law. The Montana Public Service Commission (PSC) followed NorthWestern’s lead and allowed the company to ignore a requirement for the utility to invest in Montana communities by purchasing renewable energy from small community-based projects. The penalty for this violation will provide much-needed revenue to Low-Income and Tribal Energy Assistance programs. These funds are more crucial than ever after residential and business customers started suffering from NorthWestern’s steep 28% electricity rate increase approved by the PSC in the fall.

The case involved a state law that was designed to spur renewable energy development while boosting local economies. The law required public utilities to purchase a specified amount of electricity output from small, locally owned renewable energy resources. Since the law took effect in 2012, NorthWestern Energy never once complied with its purchase obligation. Instead, NorthWestern advanced a series of excuses for excluding such small renewable resources from its portfolio. And in each of those years, the PSC accepted those excuses to waive the company’s obligation to pay a penalty for its noncompliance.

In 2018, Montana Environmental Information Center, represented by Earthjustice, sued to overturn the commission’s grant of compliance waivers for two years — 2015 and 2016. In 2022, a state district court in Montana agreed and directed NorthWestern to pay a $2.5 million penalty into Montana’s Low-Income Energy Assistance fund. While the Montana legislature repealed the CREP-purchase requirements in 2021, the Montana Supreme Court ruled yesterday that NorthWestern was still obligated to pay penalties for failing to comply in 2015.

The Montana Supreme Court’s decision largely affirmed the district court’s ruling. With regard to the 2015 waiver, the court found that the PSC’s “factual findings are sparse, at best,” and “the record evidence demonstrates that NorthWestern was not prevented from compliance by ‘legitimate reasons’ beyond its control” but instead NorthWestern’s actions did not “amount to even the most marginal due diligence.” Instead, NorthWestern created unreasonable barriers for projects to be selected. The court found the PSC needed to make a more detailed determination “regarding NorthWestern’s compliance or non-compliance with its [legal] obligations in 2016.”

“It’s beyond time for NorthWestern to embrace the opportunity of renewable energy. It’s clean, affordable, and as the Supreme Court has affirmed, the law required it,” said Earthjustice attorney Emily Qiu, who represented MEIC in the case.

“NorthWestern Energy has done everything it can, including breaking the law, to avoid providing its customers with clean, affordable electricity,” said Anne Hedges, co-director of MEIC. “It’s time for the PSC to stop enabling NorthWestern’s outdated behavior. The PSC should insist NorthWestern save its customers money, reduce risks, and diversify its portfolios by investing in clean electricity instead of NorthWestern’s approach of looking in the rearview mirror. The PSC has an opportunity to help NorthWestern move forward and protect customers by adopting a rule that requires consideration of risks and costs posed to our energy system and customers’ pocketbooks by a changing climate.”

NorthWestern cannot charge its customers for the penalty it will pay for non-compliance.  The penalty must be deposited in an assistance fund, which finances low-income bill assistance and weatherization programs in Montana.