One energy company with operations in Montana is disputing another energy company’s claim that it should be allowed to be the exclusive supplier of huge amounts of power to data center companies planning to start operations here.
NorthWestern Energy wants permission from the Montana Public Service Commission to be the only company to serve “large-load customers,” meaning data centers that are proposing to consume huge amounts of power in Montana.
NorthWestern Energy is proposing to do that using new shares of ownership in the coal-fired Colstrip Generating Station power plant that it is acquiring in 2026.
NorthWestern’s vice president and chief financial officer Crystal Lail told the PSC earlier this year that “these new customers will become electric supply customers of NorthWestern Energy because customer choice for supply no longer exists in Montana,” due to a 2007 law.
But Talen Montana, an energy company that owns a 30% stake in one unit of the Colstrip plant, is asking the PSC to allow data centers to “exercise choice and seek electric service from competitive suppliers.”
Talen Montana has hired high-powered attorney and current state Rep. Bill Mercer of the Billings law firm Holland and Hart to represent the company before the PSC, which regulates utilities in Montana.
NorthWestern Energy is Montana’s largest monopoly utility. Over the last nine months or so, the company has announced letters of intent to supply as much as 2,000 megawatts of power, combined, to three different data center companies by the year 2030. Another data center in Great Falls could add even more to that load. The total load for all NorthWestern Energy customers in Montana right now is only about 750 megawatts. It appears that the AI boom is creating demand for power that surpasses anything ever seen before in Montana.
In February, the Public Service Commission sent an inquiry to NorthWestern asking the company to prove that supplying that much energy would not adversely affect other customers or the energy grid.
NorthWestern, in their response, argued that “customer choice for supply no longer exists in Montana” because of a 2007 law passed by the Montana Legislature.
But Mercer, the attorney working for Talen Montana, wrote in a memo to the PSC that he disputes NorthWestern’s interpretation of that law.
“Talen is an active participant in wholesale electric markets in Montana,” Mercer wrote. “Talen is also committed to maintaining competitive options for large electric loads in Montana and ensuring that those loads are served by the market unless the Commission determines that such service would not harm residential or commercial customers. NorthWestern’s new legal interpretation is wrong on the law and contrary to the legislature’s intent to protect customers from the costs associated with serving new large loads in Montana unless the Commission specifically deems such service in the public interest.”
Mercer’s seven-page memo is dense on legal theories and a little complicated for the average person to understand. His arguments largely rest on his assertion that the 2007 law explicitly prevents a large-load customer like the data centers from buying electricity from a public utility, like NorthWestern, without the PSC first determining that buying that power from the utility would not “adversely impact” the utility’s other customers.
It will be up to the five-member Public Service Commission to decide whether he’s right.
“In short, contrary to NorthWestern’s contentions, large new loads like data centers may exercise choice and seek electric service from competitive suppliers,” Mercer wrote. “If, however, these new large-load customers want to purchase electricity supply service from NorthWestern, the statute clearly contemplates that they must first demonstrate, to the Commission’s satisfaction, that such service will not adversely impact NorthWestern’s other Montana customers.”
The law firm Mercer works for, Holland and Hart, has a representative (Sarah Clerget) on Gov. Greg Gianforte’s new Unleashing American-Made Energy Task Force, which will make recommendations to Montana lawmakers. Both Talen Energy and NorthWestern Energy have representatives on the task force. John Chesser, the CEO of Quantica (a data center company with plans in Montana) is a former executive of Talen Energy. Chesser is also on the task force.
David Erickson is the business reporter for the Missoulian.
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