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small brandlWhere does your energy come from?
 
At NorthWestern Energy, our goal is to provide our customers reliable energy at the lowest long-term cost. We do this through a balanced mix of safe, reliable, affordable and clean energy. Our electric portfolio is built on the carbon-free hydro system, along with wind, coal, gas and solar. Wind and solar are variable energy resources, meaning they don’t produce power if the wind isn’t blowing or the sun isn’t shining. Coal and natural gas are reliable and resilient energy sources that can start up quickly whenever we need them. This mix of renewable and traditional resources help us keep energy bills as affordable and predictable as possible.
Energy Supply-8

Our business is about keeping the lights on, but we also understand that our customers want electricity at a reasonable cost.

Providing our customers reliable energy at the lowest long-term cost is our goal.

A little history:

2018_MT_electric_generation_chartIn 1997, the Montana Legislature passed a bill to allow the deregulation of Montana’s utility companies. Following deregulation, Montana Power sold its generation fleet, which meant power had to be purchased off the open market, rather than produced in state. This left customers entirely exposed to prices in the unregulated power markets beyond Montana’s borders. Since purchasing Montana Power in 2002, NorthWestern Energy has worked to address this vulnerability and has made great progress. Producing electricity in state is a priority for our company. This allows us to have greater control over energy prices and availability.

Today, our Montana electric portfolio is built on the carbon-free hydro system, along with wind, coal, gas
and solar. NorthWestern’s electricity portfolio has the capacity to be 70% carbon free. However, because wind and solar don’t always produce to their full capacity, our actual generation is about 61% carbon free.

Our portfolio produces enough energy to meet customers’ average energy demand. However, at times
of high-energy demand – the coldest nights in winter and the hottest days of summer – our customers’ needs exceed our generation and customers are at risk both of insufficient energy supply and of volatile prices on the regional energy market. We call this market price risk.

The future:

Spion Kop-1Market price risk will increase. From 2019 through 2032, the western region of the U.S. will
experience the loss of almost 7,000 megawatts (MW) of baseload generation, as more coal plants are taken off line, including Colstrip Units 1 and 2 in Montana. That is a loss of generation equal to the energy needed to power several million homes. Meanwhile, energy demand is increasing and is forecasted to continue to increase.

When the wind doesn’t blow and the sun doesn’t shine:

The 2018/2019 winter highlights the risks of relying on the market when energy demand is high. Our expectation going into March 2019 was to purchase, for the entire month, 43,200 megawatt hours (MWh) of electricity from the market at a cost of $997,056, or $23.08 per MWh. However, due to the cold weather and a shortage of energy in the region, on March 3 and 4 alone, we purchased 9,632 MWh of electricity at a cost of $8,277,380. This was an average price of $859.36 per MWh. At that same time, Colstrip was producing energy at the cost of $15 per MWh.

NorthWestern Energy has invested in wind and solar resources. However, wind and solar are variable energy resources, meaning they don’t produce power if the wind isn’t blowing or the sun isn’t shining. Adding more wind or solar isn’t the simple solution to meeting our reliability needs. Our customers also need resources that can be dispatched on-demand to ramp up or shut down quickly. Our portfolio needs to be ready to produce enough power for an extreme event – such as a frigid day in January or a sweltering day in August.

“We can’t count on the wind to be producing at full capacity in those instances, so if we wanted to use only wind to meet our peak loads we would have to build a lot of extra wind,” said Ben Fitch-Fleischmann, manager of energy supply planning. “We looked at what we would need to build to meet peak loads without adding any new fossil-fueled resources, and it would cost about $500 million more than the least-cost alternative.”

What's next?


Carbon free leader

Our current portfolio is adequate for average demand, but falls short on winter’s coldest days and summer’s hottest days. Future additions of wind and solar energy resources will require new flexible capacity resources to balance the energy grid and assure reliability.

“To assume the market will always be able to provide customers with sufficient electricity at affordable prices is reckless and could have severe reliability and cost consequences,” said Bob Rowe, CEO of NorthWestern Energy.

In addition, the market price for energy is becoming increasingly volatile as more renewables are added and thermal resources are retired. Market volatility is high when demand is high, which occurs during our peak load hours when we most need energy.

“There is less and less power available for the critical times of the year,” said John Hines, vice president of Supply and Montana Government Affairs. “There’s a lot of power that is available during non-critical times, but we are getting desperately short of being able to meet our customers’ needs during those critical time periods.”

Our goal is to meet our obligation to our customers to provide adequate, reliable electricity at the lowest long-term total cost, as we are mandated to do by the State of Montana. Only a serious, substantive and detailed plan will allow us to meet our customers’ needs.

“’Sustainability’ involves meeting today’s needs while being able to meet tomorrow’s needs as well,” Bob
said. “Together we can work for a responsible evolution in Montana’s energy future.”

Learn more:


To download the complete 2019 Electricity Supply Resource Procurement Plan or the Executive Summary, visit www.northwesternenergy.com/2019-resource-plan.
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