FERC has approved NorthWestern’s acquisition of Puget Sound Energy’s shares in the coal-fired Colstrip power plant in Montana and authorized NorthWestern to sell electricity produced by the plant.

FERC issued two orders Feb. 27 related to the company’s acquisition of shares in Colstrip (ER26-129 and ER26-411). Both orders concern NorthWestern’s subsidiary NorthWestern Colstrip, which was created to hold ownership in the coal-fired generation asset, according to FERC.

In the first order, FERC accepted NorthWestern’s cost-based rate (CBR) tariff for short-term sales of electricity produced by its share of the plant. In the second order, the commission approved a power purchase and sale agreement between NorthWestern and Mercuria Energy America.

FERC said both filings were “just and reasonable and not unduly discriminatory or preferential.” The orders are effective Jan. 1, 2026.

NorthWestern reached an agreement in 2024 to acquire PSE’s 370-MW stake in two units of the Colstrip power plant effective Jan. 1, 2026. The deal came about after PSE was forced to exit the plant because of Washington state law.

NorthWestern also has acquired Avista’s 222-MW share in the plant, giving the company 55% ownership, according to NorthWestern’s website.

The transaction received backlash from Montana Public Service Commissioners and the Montana Environmental Information Center. The opponents argued in filings with FERC that NorthWestern failed to receive authorization for the agreement under Section 203 of the Federal Power Act.

The opponents said there is a risk that “generation from the Colstrip station will be contracted to a large load customer and will not benefit the people and small businesses of Montana,” according to the orders.

FERC rejected those arguments, saying the FPA requires prior authorization only for transactions valued at more than $10 million.

NorthWestern acquired PSE’s shares in the power plant “at a transaction price of $0. Therefore, this transfer is under the $10 million threshold required for commission jurisdiction under Section 203,” the orders stated.

Montana Gov. Greg Gianforte (R) supported the deal, saying the plant is “essential” to “maintaining reliability during winter conditions, stabilizing the regional grid and keeping energy affordable for Montana families, farmers and employers,” according to the orders.

According to the CBR filing, NorthWestern is negotiating various deals and made the filing to ensure it has the authority to make any short-term sales while committing to filing any long-term sale agreements with the commission.

FERC accepted NorthWestern’s proposed maximum demand charges under the CBR:

• • $11,920/MW-month
  • $2,750/MW-week
  • $390/MW-day
  • $16.30/MWh

The order states that all services agreements should be governed under the terms and conditions of the Western Systems Power Pool agreement.

Meanwhile, NorthWestern’s agreement with Mercuria Energy provides for the sale of long-term capacity and energy from the power plant. NorthWestern is responsible for all “interconnection and transmission arrangements, electric losses and necessary costs to deliver energy, capacity and ancillary services to the point of delivery,” according to the order.

FERC found the agreement’s proposed capacity and energy rates “just and reasonable” because they fall below the ceiling demand charge in the associated CBR tariff, the order stated.