FERC will not rubber stamp NorthWestern Energy’s proposal on Mill Creek

In an Order issued Friday, FERC has found that NorthWestern Energy’s proposal was not “just and reasonable” and will grant only temporary acceptance until a full hearing can be held. 

This is a big deal for Montana rate payers as FERC is committing to a rigorous analysis of NorthWestern Energy’s proposal.  It will be interesting to see if any of the Montana media picks up the story, how this alters NorthWestern Energy’s filings with the MT PSC on the same subject, and to what degree it may impact expectations about company revenues.  NorthWestern Energy has invested around $150 million into the plant, and any change by FERC or the MT PSC, on how NorthWestern Energy will recover costs could drastically alter their financial projects and bottom line.  

The Order highlights a number of very substantive issues as to how Mill Creek will be operated that quickly dive off into energy wonk land.  Suffice it to say, they are not taking anything NorthWestern Energy has proposed on face value.  

NrothWestern Energy has filed to include Mill Creek in the "rate base"

The full press release is available from NorthWestern Energy here.  The links are still broken for the filings, but except some analysis once they are available, as i know a lot of folks are watching these rates closely to see what the cost will be to regulate wind and load in Montana and how NorthWestern Energy plans to operate the facility.  

Here is how NorthWestern Energy is describing their request:

Butte, Mont. – Oct. 12, 2010 – NorthWestern Energy’s (NYSE:NWE) Mill Creek Generating Station will begin serving Montana electric customers by January 1, 2011, prompting the company to file an application to include it in energy supply rates on an interim basis until the actual revenue requirement is approved.     
 
The 150-megawatt natural gas fired plant is the first newly constructed facility to be approved under the law which allows public utilities to obtain “preapproval” of electric generation resources prior to acquisition, or in this case, construction.  The Montana Public Service Commission approved in part the preapproval application in May 2009 with the requirement that the company submit a compliance filing within 90 days after the plant is placed into commercial operation.  The compliance filing will be used to determine the plant’s final revenue requirement.  

Update: The AP is reporting that the request will increase rates for a consumer by $4.5 a month.