By Bob Rowe, NorthWestern President/CEO
When the communities we serve are thriving, that’s good for NorthWestern Energy. When we are effective and successful in our work, that’s good for the customers and communities we serve.
Through Envision 2026, the Montana Chamber of Commerce is working to create the opportunity for investment and growth to support a vibrant and healthy Montana.
At NorthWestern Energy, we support this initiative and appreciate the Chamber’s good work and leadership. We work every day to do our part to make Montana an ever-better place to live and work.
As the largest private sector provider of critical electric and natural gas infrastructure and essential service, we want to be partners to our customers and the communities we serve. Last year, we invested $240 million of capital in our Montana utility infrastructure, with a Montana operating expense budget of $405 million annually. Our total electric and natural gas critical infrastructure investment in Montana is over $4.5 billion.
According to Circle Analytics, the gross economic impact of our Montana work each year is about $2 billion. Most importantly, all this economic activity is focused on providing Montanans with reliable, affordable electricity and natural gas service. Our electric and natural gas transmission, distribution and related systems are the critical arteries and veins that provide our customers essential service. They are also lifelines for our rural electric cooperative partners, other local gas distribution companies, Montana’s industrial sector, and energy companies moving power through or out of Montana.
In 2017, we wrapped up our five-year Distribution System Infrastructure Project (DSIP) in which we invested more than $321 million in a programmatic approach to new poles, substations, tree trimming, communication systems, updated natural gas lines and other elements designed to harden our distribution system. DSIP was in addition to our base budget.
Our investments have targeted aging infrastructure, system capacity needs as our communities grow, and a “deployment at the speed of value” approach to a wide range of new technologies. Results have included fewer and shorter power outages than would otherwise have been the case, reduced the cost of responding to outages and other issues, and improved customer service. All while operating tens of thousands of miles of critical infrastructure across thousands of miles. There’s a lot of dirt between light bulbs and laptops, and much of it crosses the majestic mountains and rolling rivers.
The DSIP program successfully concluded and provides a platform for our ongoing commitment to our customers. Our investments in infrastructure and technology will continue as we build and maintain an energy system for the 21st century – with planned investment system-wide of about $1.5 billion over the next five years. This will include stepped up investment in electric and gas transmission, substations and continued investment in distribution.
Along with investing in the poles, wires and pipelines that give us light and keep us warm, we have been making significant investments in our diverse electric generation portfolio.
Late in 2014, we finalized the purchase of 11 hydroelectric facilities across Montana. In 2018, we added another wind project, this one near Two Dot, to our portfolio of owned generation.
Along with hydro and wind and a small element of solar generation, we rely on natural gas and our stake in Colstrip Unit 4 to provide reliable electricity to our customers, even on the hottest days of summer and coldest days of winter.
Our investment in hydro and wind generation has totaled more than $1 billion in recent years. The result is that more than 60 percent of the electricity we provide to our Montana customers comes from carbon-free sources. That percentage will grow this year and next as several large contracted wind projects come online.
The hydro system, in particular, is a Montana treasure and is now dedicated to serve Montanans on prices based on cost, not whatever the market will allow. It’s a dynamic system that helps provide services that were not factored into the purchase price. We are also committed to the stewardship and community partnership opportunities that go along with these great assets.
NorthWestern is by far the largest centrally assessed property taxpayer in most of the counties in which we operate. These taxes help fund schools and local government. In many counties, we are the largest taxpayer, indicating how broad is our investment in and commitment to Montana.
At the same time, we are concerned about the fairness and sustainability of the tax responsibility on both our customers and the company. Like many members of the Montana Chamber, we continue to seek stability and predictability in our Montana property-tax obligations. We expect a property tax bill of about $157 million in 2018 (roughly four times the next largest centrally assessed property taxpayer). It is our largest single expense each year and is more than we pay our entire Montana workforce in wages and benefits.
I’ve focused on infrastructure, which is a Chamber priority. I’m most proud of our people across three states and one national park. They’re the best. They are dedicated to their customers, no matter the weather or time of day. They volunteer thousands of hours to their communities. They have a great safety record. And, last year they earned the highest JD Power customer satisfaction score we have ever received. For example, when a Montana customer talks to a NorthWestern customer service representative, they’re probably in Butte, with great backup from our Huron South Dakota team as well. A few years ago we opened our larger offices for walk-in traffic, where you can stop in and talk directly to a friendly and knowledgeable NorthWestern employee. Most companies have gone in the opposite direction. We thought “old school,” enabled by new school information technology, was a better way to serve our great communities, where people still like to put a face to a name.
NorthWestern Energy is the fifth smallest investor-owned electric utility in the United States, but with one of the largest service areas – and one of the most wonderful as well. Montana is of vital importance to NorthWestern. More than 80 percent of our operations and customers are in Big Sky Country. More than 1,200 of my coworkers are proud to be Montanans and serve their hometowns. As a company, we are pleased that our investments empower our customers and communities, add to the economy, and bring added prosperity to places we call home.