By Rich Heidorn Jr.

FERC on Tuesday rejected NorthWestern Energy’s attempt to limit its liability for service interruptions to an ExxonMobil oil refinery in Montana, saying the provision was discriminatory (ER18-1715).

The utility had attempted to include the limitation in an unexecuted network integration transmission service agreement for ExxonMobil’s Billings refinery, saying it was needed because of the facility’s size, its “sophisticated equipment” that is “particularly sensitive” to loss of power, and that its continuous 24/7 operation lacks a backup power source.

The liability provision stated that neither party would be liable for “consequential, special, indirect or incidental damages whether arising in tort or contract, including a breach or alleged breach” of the agreement.

In 2016, ExxonMobil sued NorthWestern in state court, seeking $92.4 million in damages and lost profits over two power outages at the refinery that the oil company said resulted from NorthWestern’s negligence. The case was settled in December 2017 but terms were not released.

NorthWestern said the service interruptions — a 96-minute outage in 2014 and a 53-minute outage in 2016 — were caused by faults on its 50-kV radial lines feeding the refinery. It said the outages were triggered by problems on the distribution system of the city of Billings’ sewer plant. ExxonMobil’s suit alleged the utility was negligent because protective relays on its 50-kV lines were not coordinated with the relay system at the sewer plant.

FERC agreed with ExxonMobil that the liability provision was unduly discriminatory because NorthWestern was not seeking to impose such limits on other transmission customers, including three other oil refineries it serves in Montana.

“A transmission provider seeking commission acceptance of a non-conforming agreement bears a high burden to justify and explain that the non-conforming aspects of the agreement are not merely ‘consistent with or superior to’ a pro forma agreement but are necessary,” FERC said.

The commission rejected NorthWestern’s argument that ExxonMobil expected perfect, uninterrupted service. “ExxonMobil’s lawsuit against NorthWestern was not based merely on service interruptions, but the allegation that NorthWestern had ‘negligently failed to exercise reasonable care in designing, constructing, installing, managing, maintaining, inspecting and operating its electrical facilities and equipment,’” the commission said.