NorthWestern Energy's surprise announcements in December that it is buying a larger stake in Colstrip Unit 4 and that it plans to drastically cut carbon left some wondering how a utility can buy more coal-fired generation and cut carbon emissions.
However, NorthWestern's plan is based not on cutting actual emissions, but rather on cutting its carbon intensity, as its December announcement noted while also implying it was part of a "carbon-reduction" goal.
Environmental advocates say the plan is deceptive. NWE President/CEO Bob Rowe said the company's carbon statement balances its requirement to keep customers' lights on and be environmentally responsible.
"The way to think about the carbon statement is paired with our Montana supply plan," he said during an interview with Clearing Up. "We think about the carbon goal as we think about the plan."
That goal is laid out in an eight-page pamphlet called 'Our Vision for Montana,' the utility issued in December. It stated, "NorthWestern Energy commits to reduce the carbon intensity of its electric energy portfolio for Montana by 90 percent by 2045."
The 90 percent reduction is based on 2010 as the starting point. At that time, NWE generated 1.12 tons of CO2 per megawatt-hour. That dropped to 0.54 tons/MWh in 2015 following the purchase of a hydro system. NorthWestern expects a further drop to 0.42 tons/MWh this year. By 2045, the utility aims to hit 0.14 tons/MWh.
If the company hits its 2020 projection, it will already be 71 percent of the way to reaching its goal. Most of that drop in carbon intensity came in 2014, when NWE purchased PPL Montana's 633 MW capacity hydroelectric fleet (CU No. 1614 ).
Adding hydro capacity is a "magic bullet" for NorthWestern Energy, giving it carbon-free baseload capacity, Rowe said.
NorthWestern did not retire any carbon-emitting resources as a result of the acquisition, so while its carbon intensity plummeted, it's actual carbon emissions were unaffected.
"The planet doesn't care about carbon intensity, the planet cares about carbon emissions," said Anne Hedges, deputy director of the Montana Environmental Information Center.
Carbon intensity "is deceptive, it is dishonest, it is disingenuous," she said.
Climate change is a real risk for Montana, and "NWE is dancing around the most important issue of the day," Hedges said.
NWE investors are starting to push the company to put climate change front and center in its planning. One shareholder has sued the company, hoping to force it to put his proposal to limit future carbon emissions to a vote at NWE's annual shareholder meeting (CU No. 1934 ). In January, NorthWestern's single biggest investor, BlackRock Capital Investment, told companies in its portfolio—which also includes Avista and Portland General Electric—they need to be proactive in cutting greenhouse gas emissions (CU No. 1937 ).
NorthWestern spokeswoman Jo Dee Black rejected the accusation that the utility was trying to deceive anyone. To the contrary, "NorthWestern has been nationally recognized as a leader when it comes to transparency and governance," she said.
Further, a carbon-intensity reduction plan is not unique to NorthWestern, she said.
"NorthWestern Energy's plan is realistic and achievable," she said. "The vision will be updated regularly as technology, government policy and the markets change."
If the company "can do better and move faster, we will," she said.
The utility knows "more carbon-free resources are coming on the market, we know the investments we'll be making in our hydro system, and we know what we have achieved to date with energy efficiency" and will continue to achieve, Rowe said.
"There isn't a specific technology identified" to help NWE cut its carbon intensity or emissions, he said.
NorthWestern plans to install smart meters in the next few years in Montana, which will make grid management more efficient and help customers fine-tune their consumption, he said.
Company executives expect one or more emerging technologies will mature enough to help it toward its goal. The utility has pilot projects involving energy storage, and it is looking into nonchemical storage options.
NorthWestern plans to start soliciting proposals for 280 MW of dispatchable capacity resources to be on line in 2023. The responses should indicate how new technologies can be paired with noncarbon resources, Rowe said.