Developers and backers of small, independent solar- and wind-power projects have won a trio of lawsuits against Montana’s Public Service Commission -- and now the state Supreme Court will decide whether the PSC is illegally undermining these projects.
Supporters of the projects say the five-member PSC, controlled entirely by Republicans, is ignoring laws that require it to set reasonable rates and contract terms for NorthWestern Energy to buy these projects’ power.
“NorthWestern Energy is incredibly hostile to renewable energy,” says Anne Hedges of the Montana Environmental Information Center. “It just doesn’t want to engage in the legal requirements to invest in renewable resources, like other utilities are doing cost-effectively across the country right now.
“And the PSC is doing the bidding of NorthWestern Energy.”
But the commission -- which, along with NorthWestern, appealed two of the court rulings to the Supreme Court -- insists it is not only following the law, but also protecting consumers.
“Both Montana and federal law say while, on the one hand, we have to encourage the development of renewables, we have to do it in a way that holds the ratepayers harmless with regard to cost,” PSC Chairman Brad Johnson told MTN News on Tuesday.
Johnson says the PSC believes its orders, challenged in court, have prevented NorthWestern consumers from paying above-market costs for electricity from the smaller renewable projects.
In the past several months, Hedges’ group, Vote Solar and two solar-power developers have won three separate court decisions challenging PSC actions since 2017 on renewable-power projects.
First, District Judge Jim Manley of Polson overturned a PSC order that had set a new, lower rate and shorter contracts for renewable-power projects smaller than three megawatts. He called the PSC action “arbitrary and unreasonable” and ordered the commission to set new rates and longer contracts.
Developers had said the new rates and contract lengths made it difficult, if not impossible, for them to finance a project.
Two months later, in June, Manley ordered the PSC to assign a 25-year contract and a rate of about $40 per megawatt-hour for MT Sun, a proposed 80-megawatt solar-power project just north of Billings.
Developer Mark Klein told MTN News the project means about $100 million of investment and scores of construction jobs.
Then, earlier this month, Manley also overturned a PSC order that allowed NorthWestern to waive requirements that it buy a certain amount of power from locally owned, small renewable power projects.
The PSC has yet to decide whether to appeal the last ruling.
NorthWestern has said the judge should not be setting rates for renewable-energy projects, and that it’s up to the PSC to determine those rates, based on costs tied to future markets.
The company also has said it has plenty of renewable-power projects in its portfolio, but wants to make sure other projects meet consumers’ needs.
Mike Uda, an attorney representing MT Sun before the commission and in the lawsuits, told MTN News that federal and state law require NorthWestern Energy to buy the power from small, independent renewable-power projects that meet certain standards.
When the utility and the projects can’t agree on a contract, the PSC is supposed to set reasonable terms, he says.
Instead, the PSC has been setting terms that essentially prevent contracts from happening, that make it un-economic for the developer, he says.
“What we need the commission to do is establish a rate and terms and conditions for the contract so that the project can go forward and obtain financing and be built, and start delivering electricity to the utility,” Uda says.
Johnson told MTN News that the PSC is not obligated to set terms favorable to the developer. Instead, the law requires the commission to set rates that reflect what the utility might pay for power elsewhere, on the market.
“We’ve got to go to the least-cost resource that meets the criteria of demand,” he said.
But Uda and others say the prices sought by the small-project developers are affordable -- and, good for local economies and the environment.
For example, he noted, the rate set by the judge for the Billings solar project at slightly less than $40 per megawatt hour is much less than the cost of resources owned by NorthWestern, such as power from the Colstrip 4 power plant or hydroelectric dams purchased several years ago.
“We can get (this power) at a cheap price and it’s going to promote rural economic development, which parts of the state badly need,” Uda said. “I believe people want it here, and the only question is, why would you be against this?”
