Public Service Commission says NorthWestern’s energy plan ‘deficient’

Every three years, NorthWestern Energy must do an assessment of how much power it will require to meet customer needs in the future and the resources it will use to meet those needs in a cost-effective way.

The PSC doesn’t have the authority to reject the plans, but it has the authority to review whether they meet minimum requirements and send them back if they don’t.

Based on a consultant’s report, public comments, and its own analysis, PSC staff found the plan had five shortcomings, meaning it doesn’t meet minimum requirements in Montana. Staff recommended the commission request improvements.

“Returning the plan isn’t necessarily a wholesale rejection of the plan,” said PSC Vice President Jennifer Fielder, who made the motion to request more work on the document. “It’s basically a quality control step.”

Commissioner Annie Bukacek, who raised concerns about the cost of the Integrated Resource Plan and its impact on customer bills, cast the only “no” vote.

(Only four commissioners voted because Commissioner Brad Molnar has been suspended, although he is fighting the suspension in court.)

In the report, the consultant, GDS Associates, found the draft 2026 plan was “a substantial step forward” from the utility’s 2023 plan and reflected NorthWestern’s “growing analytical capabilities.”

But GDS also said the plan fell short in a number of ways, including in its treatment of data centers.

The report said the plan identifies data centers as “potentially significant” drivers of energy needs, but NorthWestern isn’t transparent about how it is including data centers in its forecasts.

“As these customers become a larger component of future load growth, the methodologies used to evaluate and incorporate them into long-term forecasts will become increasingly important to resource planning outcomes and future customer costs,” GDS said in its report.

Commissioner Randy Pinocci said his constituents have expressed concerns that NorthWestern has power available for customers but is going to reserve it for data centers — and then charge customers if it needs more supply.

“Are they going to build something and charge a ratepayer?” Pinocci said.

The PSC staff report found NorthWestern evaluated short-term energy needs based on the requirements of a compliance program to which it belongs, but it didn’t take a comprehensive look at long-term needs — required by state regulation.

When NorthWestern runs forecasts, the consultants said it uses models in a way that could bias outcomes in favor of resources that are more expensive, such as a power plant.

The staff report said the PSC had raised a similar concern in NorthWestern’s 2023 resource plan, and it asked for more information again this time.

“GDS … notes the 2026 IRP (Integrated Resource Plan) does not resolve the transparency and documentation concerns the Commission identified with the 2023 IRP,” the staff report said. “Staff agrees with GDS’s assessment.”

Bukacek said the cost of the consultant’s report, up to $260,000, along with the cost of producing the resource plan itself would be passed onto ratepayers. She said Claude AI put the cost in the millions, although a PSC staff analyst said he wouldn’t be able to assess the accuracy of that estimate.

Fielder agreed the resource plan wasn’t a cheap undertaking. However, she said the plan drives expenses “that are exponentially greater” over the long run for Montanans, and it had to be done right.

In other words, an imprecise plan could result in costly, unneeded energy resources for which customers would have to pay — or in not enough power for customers.

“Having incomplete analysis at this point in an IRP actually increases the chance that there could be overbuilding, which would result in higher rates, or under-preparing, which results in those reliability risks,” Fielder said.

The PSC directed NorthWestern to correct its plan within 30 days or request an extension if needed.

A spokesperson for NorthWestern Energy earlier said the utility would review any recommendations from the Public Service Commission and in the GDS report, and it welcomes perspectives that “help strengthen energy planning efforts.”

“The 2026 IRP reflects extensive analysis, data and stakeholder engagement to evaluate how best to serve our Montana customers’ energy needs while maintaining reliable and affordable service,” said NorthWestern Energy’s Jo Dee Black in an email.