HELENA – Last week’s Public Service Commission order to set new rates and contract rules for small, independent solar-power projects in Montana undercuts all solar-power development in the state and should be reconsidered, renewable power advocates told MTN News Wednesday.
One of the project developers also said the PSC’s order may violate federal or other laws, and that the company is considering its legal options.
“There was a rate in effect and on the books (when we applied for it),” said Steve Levitas of Cypress Creek Renewables. “That was the rate, that was the law, and developers like us were allowed to rely on that.”
The PSC voted last week to cut by nearly 50 percent the rate that NorthWestern Energy must pay for the projects’ power. The power then becomes part of the mix of electricity that NorthWestern sells to its 360,000 customers in Montana.
The PSC also capped the length of the contract at 10 years and said the rates can be recalculated after five years.
Solar-power advocates say with those changes, no new small solar-power projects will be developed in the state.
They also say it discourages all solar-power development in Montana, because the PSC has signaled that it doesn’t value solar power.
“A key part of this was the commission determining how much energy and value solar can provide to NorthWestern Energy in Montana, and they severely undervalued that in this ruling,” said Brian Fadie, clean energy program director for the Montana Environmental Information Center. “It’s going to have a precedent effect on other projects of all sizes.”
Fadie said solar-power advocates likely will ask the PSC to reconsider its ruling.
The commissioners, all Republicans, said the move protects consumers from being forced to pay above-market prices for the electricity from these small solar-power projects.
“We determined that we had to do something, otherwise the ratepayers in Montana were going to be hit with some artificially high rates of power that the utility has to take,” Commissioner Bob Lake, R-Hamilton, told MTN News Wednesday.
NorthWestern Energy, which is required under federal law to buy power from certain small, clean-energy projects, prompted last week’s ruling by asking a year ago to suspend the old rate.
The company said the old rate was much higher than it could purchase power elsewhere.
“It was unfair for our customers to have all this overpriced electricity locked in for 25 years,” company spokesman Butch Larcombe said Wednesday.
But solar-power advocates say the old rate of $66 per megawatt hour is not unreasonable, and that no one will finance a power project with a contract as short as five years.
Fadie said polls have shown that Montanans overwhelmingly support renewable power.
“We know that solar can provide tremendous value to customers on NorthWestern’s grid,” he said. “It’s clean, it’s renewable, these projects can go up in a relatively short amount of time, compared to these large, centralized power plants.”
Cypress Creek has proposed 14 small solar-power projects near Great Falls, Helena, Butte and Bozeman, as well as in Madison and Liberty counties.
Other developers have proposed many other projects, hoping to take advantage of a favorable rate in effect since 2013.
Levitas of Cypress Creek said the company planned to spend $50 million on its projects in Montana, including $5 million in construction wages.
He said NorthWestern had assured Cypress Creek that it would qualify for the old rate, but now it appears that the company would have to accept the new, lower rate.
“We had thought we’d remain eligible for the (old rates), and the PSC pulled the rug out from under us,” Levitas said.
Lake said the PSC is under no obligation to guarantee that small, renewable power projects can make money selling to NorthWestern, and sets the rate based on what power is available for elsewhere.
“Our role is to protect the ratepayer and also make sure that the utility has no harm,” he told MTN News.
Levitas said federal law requires that these small, renewable projects can get a contract length that gives them a reasonable opportunity to get financing – and that the length approved by the PSC doesn’t do that.
“They completely disregarded federal law,” he said.