A NorthWestern Energy shareholder has taken the investor-owned utility to court, to get limiting its future carbon emissions put to a vote at the annual shareholder meeting in April.
The investor, Thomas Tosdal, is suing NWE in federal court to include his proposal to limit emissions in materials sent to shareholders ahead of the meeting. The lawsuit, filed Dec. 22, comes at the same time the utility is moving to buy more coal-fired capacity.
Tosdal's proposal would require NorthWestern to replace coal-fired generation from the Colstrip power plant with noncarbon-emitting resources by 2025, and to present a plan for doing so at its 2021 shareholder meeting.
NorthWestern initially rejected the proposal, claiming Tosdal failed to verify that he owned the requisite number of shares in the company and had done so for at least a year, as required by Securities and Exchange Commission regulations. Those issues were resolved before the fall deadline for proposals.
The utility then took the fight to the SEC. Jones Day, a Chicago law firm representing NWE, asked the SEC in a Dec. 17 letter to weigh in on NorthWestern's reasons for leaving Tosdal's proposal out of the shareholder meeting, which is scheduled for April 23.
NWE argues in the letter the proposal aims to "micromanage" complex company operations that shareholders are unqualified to evaluate. Further, the utility alleges that carbon-emission rates and future remediation liabilities related to Colstrip cited in Tosdal's proposal are "false and misleading."
Micromanagement and false and misleading statements are both grounds for omitting proposals from proxy materials under SEC regulations.
Tosdal's proposal "seeks to impose a specific time frame and a specific method for addressing a complex policy and limits the judgment and discretion of management, in violation of the SEC's rule," NorthWestern spokeswoman Jo Dee Black told Clearing Up.
The proposal says the company's projected carbon emissions in 2038 will be "very close to those in 2020, about 800 pounds of carbon dioxide per MWh." NWE has told the SEC it projects going from 840 lbs/MWh in 2020 to 750 lbs/MWh in 2038, a decline of more than 10 percent.
The company's letter also disputes the proposal's characterization of the amount of and NWE's share of Colstrip remediation costs. NorthWestern says Tosdal misrepresents the Montana Department of Environmental Quality's projection of $700 million in future costs as present costs. Further, the letter says, the utility's share of cleanup costs are fixed based on its share of Colstrip Unit 4.
The utility also disputes as false and misleading the proposal's assertions that Colstrip units 3 and 4 "continue to emit unlawful levels of hazardous air pollutants," and that noncarbon-emitting clean energy resources are cheaper than coal and readily available.
Tosdal responded by asking the U.S. District Court of Montana to declare NorthWestern has to send his proposal to shareholders for a vote at the annual meeting [9:19-cv-00205-DLC]. An experienced litigator, Tosdal represents himself in the case.
The case initially was assigned to U.S. Magistrate Judge Kathleen DeSoto. That same day, she recused herself. DeSoto previously represented NorthWestern as an attorney. The case was reassigned to Chief U.S. District Judge Dana Christensen.
"NorthWestern Energy will defend our actions in court," Black told Clearing Up.
Tosdal did not reply to requests for comment.
"All I'm looking for is a vote on this," he told the Montana Standard. "A vote by shareholders on preparing a plan. If the company acted in good faith, they'd see the sense in that.
"This request is sort of like pushing a mule," Tosdal told the paper.