The state Public Service Commission has approved NorthWestern Energy’s plans to build a new natural-gas-fired power plant near Anaconda, while acknowledging that the $206 million project would cost Montana consumers dearly. Construction and operating costs are expected to raise the average homeowner’s electric rates by $35 to $50 a year when the plant goes online in 2011.
The 150-megawatt Mill Creek plant is designed to provide “balancing” power that fills gaps in utility grids created by fluctuations in demand or intermittent power sources like wind farms. NorthWestern, whose predecessor sold all generating capacity in the wake of 1997 deregulation, pays up to $30 million annually for that type of power now. But the company says it’s becoming increasingly expensive to buy from generators in nearby states and Canada. Mill Creek would give NorthWestern its own source of electricity, reducing the amount it must purchase on the volatile open market.
Commissioners voiced qualms about the plant’s projected expense; annual costs to ratepayers are estimated at $68 million a year—more than twice the current costs of balancing power. But they said that consumers would benefit in the long run from a reliable, price-regulated source of power. Construction is slated to begin later this year.