Northwestern Energy asks Montana PSC for temporary PCAM waiver after Avista Colstrip acquisition

Northwestern Energy asked the Montana Public Service Commission on Dec. 9 to grant a narrow, temporary waiver of PCAM (Power Cost Adjustment Mechanism) tariff provisions tied to its planned Jan. 1, 2026 acquisition of Avista’s 222‑megawatt share of the Colstrip generating units. Company counsel Mike Green told the commission the firm wants revenues from three identified wholesale contracts to be excluded from PCAM for calendar year 2026 so those revenues, less a fuel proxy, can be used to offset new operations and maintenance costs for the acquired share.

"This is not a request for a rate increase. This is not a request to recover these costs from customers directly," Green said, adding the company would bear any shortfall under the proposed arrangement. He described the waiver as a temporary, trackable way to match the new revenue with new O&M and to avoid a sudden PCAM credit that could create rate volatility before the commission completes a full rate review.

Intervenors pushed back. Jenny Harbine of the Montana Environmental Information Center (MEIC) warned the petition is "last‑minute" and unprecedented, saying Northwestern signed the Avista purchase in January 2023 but waited nearly three years to seek any rate treatment. Harbine told the commission the record is inadequate to determine whether the costs would produce just and reasonable rates and highlighted the company’s cited figure of roughly $18,000,000 in annual fixed O&M tied to the acquisition.

"There is a striking lack of evidence in this docket for Northwestern’s request," Harbine said, arguing the commission should not create a new precedent of moving fixed costs into the PCAM without fuller prudence and used‑and‑useful review.

Jason Brown of the Montana Consumer Council similarly urged more data and a clearer allocation proposal, saying the parties and consumers need dispatch and cost information to understand how revenues and costs associated with the 222 MW addition — including a 58 MW portion MEIC noted is not expected to serve Montana retail customers — will be allocated between wholesale counterparties and retail customers. Brown said any relief should be interim and preserve stakeholders’ rights to later review.

In rebuttal, Northwestern reiterated that the three contracts at issue are wholesale deals (two with Energy Keepers and one with Bighorn Electric Cooperative), that those contracts can be separately tracked, and that the company is willing to have the O&M subject to prudence review in the PCAM true‑up process and, ultimately, in a general rate case for permanent rate treatment. Green argued the waiver is narrower and faster than alternative approaches that would require contested preapproval dockets or immediate inclusion of O&M in base rates.

Commissioners used a brief question period to press for specifics. Commissioner Welborn confirmed the three designated contracts are wholesale sales to Energy Keepers and Bighorn Electric Cooperative. The chair clarified "customers" referred to retail customers subject to the PCAM. Commissioner Molnar made pointed remarks criticizing the timing of the filings; the chair admonished commissioners to confine questions to clarifying matters in the docket.

The commission took the motion under advisement. The chair said staff will circulate a schedule for written follow‑up questions and that the commission expects to meet in a work session in mid‑January for further deliberation. No vote was taken at the Dec. 9 oral argument.

Key details: Northwestern seeks exclusion only for revenues from three identified wholesale contracts during calendar year 2026; the company says it acquired the Avista 222 MW share at zero capital cost effective Jan. 1, 2026 and would bear any shortfall; intervenors raised lack of prudence review, incomplete evidentiary record and the company’s delay in seeking rate treatment.