NorthWestern allowed to negotiate solar power contracts

HELENA – State regulators voted Thursday to allow NorthWestern Energy to temporarily negotiate contracts with companies that propose building solar energy projects in Montana, rather than paying the set rate that the utility complained was too high.

“Our action today to protect NorthWestern Energy’s customers from unreasonably priced solar power is a compromise that still allows solar energy development to continue across the state,” Montana Public Service Commission Chairman Brad Johnson said in a statement.

The federal Public Utility Regulatory Policies Act, which seeks to promote renewable energy, requires utilities to buy electricity from small suppliers at prices and terms set by state governments. Montana’s rate for solar projects, set in 2014, was $66 per megawatt hour with contracts lasting 25 years.

NorthWestern Energy sought relief in May after developers had proposed 43 solar projects. The utility said anticipated small solar projects could create over $215 million in additional costs to their customers over the next 25 years if the PSC didn’t suspend the current rate. The utility also said it did not need the additional power.

The Montana Consumer Counsel, which represents ratepayers, agreed that the long-term risk of harm to customers justified the relief requested by NorthWestern. The rates set under the federal rules are supposed to be close to the rates the utility would incur if it generated the power itself and not adversely affect customers.

The PSC voted 3-2 to suspend the rate on Thursday and allow NorthWestern to negotiate with potential solar energy developers. The PSC said it would be willing to help resolve matters if developers and NorthWestern couldn’t reach a contract agreement. The PSC plans to establish new rates in six months. NorthWestern has suggested an average cost of $34 to $44 per megawatt-hour.

Commissioner Roger Koopman said the 2014 rates are outdated and inflated.

“Meanwhile, out-of-state solar developers are flooding into Montana, anxious to capture the windfall profits created by an ill-conceived federal program that the PSC is required to enforce,” Koopman said. “Today’s action was a rate-payer rescue effort by the majority that at least plugs the hole in the dike while we go about setting new, more accurate rates.”

Commissioners Travis Kavulla of Great Falls and Kirk Bushman of Billings voted against the suspension.

Kavulla said he’s not sure suspending the rates is legal and the PSC should have just updated them right away while Bushman said the rates set under federal rules should be suspended entirely, allowing the market to set the prices.