HELENA-Two solar-power advocates and a developer are suing the state Public Service Commission, saying its recent rulings are illegally undercutting any future development of small, commercial solar projects in Montana.
“The commission’s decision is a death knell for small solar development in Montana, at a time when demand for renewable energy is growing (and) the cost of producing renewable energy is at an all-time low,” said the lawsuit filed Wednesday in state District Court in Great Falls.
The lawsuit challenges the PSC decision this summer to drastically cut the rates at which small, independent solar-power projects can sell their output to NorthWestern Energy, the state’s dominant electric utility.
The five-member PSC also decided this fall that contracts could be no longer than 15 years, instead of the prior 25 years.
Solar-power developer Cypress Creek Renewables, Vote Solar and the Montana Environmental Information said in their suit that the two actions essentially make it financially impossible to develop small solar projects in Montana – and violate a state law meant to encourage such development.
“These projects can be economical, they can bring tax revenue, they can bring jobs, they can bring clean energy to Montana from larger-scale solar facilities,” Brian Fadie of the Montana Environmental Information Center told MTN News Thursday. “And this decision by the PSC will put an end to that.”
Yet a spokesman for the PSC said Thursday the lawsuit has no merit, and that the PSC decision ensures that rates paid for smaller commercial solar projects “more accurately reflect the true value of the power.”
“This lawsuit is about developers of power plants seeking to shift ordinary business risk to a captive set of customers,” said Chris Puyear.
NorthWestern Energy, which had asked to pay a lower rate, also said Thursday that the price proposal from solar-power developers is “far above the rate at which we could otherwise buy power.”
The lawsuit is the latest salvo in an ongoing battle that has pitted developers of small, independent renewable-power projects in Montana against the PSC and NorthWestern Energy.
The battle is tied to federal and state laws that say utilities must offer reasonable terms to buy power from these independent projects, to encourage renewable-power development. Utilities must buy the wholesale power as part of their mix of electricity that they sell to residential and business ratepayers in Montana.
The PSC, however, generally sets the rates and contract terms for the renewable projects.
Last year, at the request of NorthWestern Energy, the PSC suspended a rate that NorthWestern said was too high. At the time, solar-power developers had proposed dozens of projects in Montana that qualified for the rate, which is for projects smaller than three megawatts.
This summer, the PSC slashed the rate from $66 per megawatt hour of electricity to $31 mWh and reduced the length of the contract.
The lawsuit says the PSC chose to ignore several factors that would increase the value of the small projects’ power – and still keep the ultimate cost reasonable for consumers.
“It’s not just the market rate for energy,” Fadie said. “It’s also, what value does a solar project bring to NorthWestern’s grid? Does it offset any future power-plant construction?”