April 05, 2014 8:00 am • By MIKE DENNISON IR State Bureau2 CommentsNorthWestern Energy’s proposed purchase of 12 hydro-electric dams in Montana could impose up to $800 million of excess costs on electric ratepayers the next 15 years, unless more risk is shifted to the company, a consumer expert says.John Wilson, an economist hired by the Montana Consumer Counsel to analyze the deal, said claims by NorthWestern that the purchase benefits customers are based on assumptions that may not come true, such as future “carbon taxes” and lower maintenance costs.If those assumptions are false — and Wilson said that’s entirely possible — customers will pay $600 million to $800 million more for electricity than if NorthWestern acquired it from a source other than buying the dams, he said.“This cost increase amounts to approximately $600 to $800 for every man, woman and child in Montana, and it is money that will be extracted from the state’s economy — not money that will be recirculated within Montana,” he wrote.Allowing NorthWestern to fold the entire purchase cost into rates “is a great profit opportunity for the company, as Montana consumers will be required to compensate the company for these costs … regardless of whether the acquisition turns out to be good deal for ratepayers,” he added.Wilson, in written testimony submitted to the state Public Service Commission last Friday, said the costs for ratepayers could be lowered if NorthWestern accepts more risk, and he made several suggestions.A NorthWestern spokeswoman, however, said Friday the company stands by its analysis, which compared the costs of power from the dams to long-term costs of buying power on the open market.“We believe our assumptions are as well put-together as they could possibly be,” said Claudia Rapkoch. “Over the long term, this purchase is definitely in the best interests of our customers.”Rapkoch said while market prices may look good now, relying on them long-term has not been a good strategy.Another expert in the case also disputed Wilson’s conclusions, saying NorthWestern’s assumptions make sense, including the carbon tax, and that ratepayers would get a good, affordable long-term source of electricity by paying for the$900 million proposed dam purchase.“One would have to take rather extreme and untenable assumptions to make the hydro purchase appear to not be the preferred electricity supply,” said Tom Power, a retired University of Montana economics professor representing a Missoula low-income group and an environmental group.NorthWestern, the state’s largest electric utility with 330,000 customers, announced last September it had agreed to pay $900 million to buy the 12 dams from PPL Montana.
March 21, 2014 6:00 am • By MIKE DENNISON IR State Bureau
In a strongly worded ruling, a federal commission Thursday said Montana Public Service Commission rules are improperly hindering small, renewable-power projects in the state.
The Federal Energy Regulatory Commission said the PSC rules create an “unreasonable obstacle” for the projects to get contracts to sell their power to utilities, as well as go against a federal law meant to encourage development of the independently owned projects.
Yet the unanimous FERC ruling was not an enforcement action against the PSC, which regulates electric utilities in Montana.
Instead, FERC issued a “declaratory order,” leaving either the PSC to correct its rules or the independent power projects to take the issue to a court for enforcement.
Mike Uda, the Helena attorney representing wind-power producers who asked FERC to overturn the PSC rules, said he hopes the PSC will “do the right thing” and undo rules that prevent projects from getting contracts.
“It was a perfect system that they had to prevent (renewable power) development,” he said. “Well, now FERC has told them that’s against the law.”
Two Montana commissioners, however, said Thursday it’s too early to say how the PSC may respond to the ruling, and that its lawyers will review the FERC decision.
A spokeswoman for NorthWestern Energy, the state’s largest electric utility and a supporter of the PSC rules, also noted that FERC did not overturn the rules.
“The Montana rule still stands,” said Claudia Rapkoch. “It will be up to the judicial system to make any further disposition, if the (project developers) choose to pursue it.”
The fight is over a 22-year-old rule adopted by the Montana PSC that says if an independent, renewable-power project is larger than three megawatts and wants a contract to sell to NorthWestern or other utilities, it must win the contract in a competitive bidding process.
The rule was adopted to administer a 1978 federal law that requires utilities to buy power renewable power — wind or hydro power, usually — from independent projects, under certain circumstances.
The Montana PSC also limited to 50 megawatts the total power that can be produced by independent wind projects.
NorthWestern Energy, the state’s largest electric utility, has supported the rules, arguing that without them, the utility would be forced to accept contracts to buy more power than they need at prices above the market.
Small-power developers have long opposed the rules, saying they allow NorthWestern to ignore almost any independent power project they don’t want and, instead, choose development of its own projects.
Commissioner Travis Kavulla, R-Great Falls, who has voted against the rules, said the small-power projects can act as a check and balance against the utility, by offering power that may cost less than utility-sponsored projects.
“The bottom line is, you can’t have a utility that’s absorbing all of these opportunities (for project development), while blocking small, independent developers from doing the same things that cost the same, or less,” he said.
FERC’s ruling said requiring a small producer to win a contract through a competitive bid is “an unreasonable obstacle,” especially when such bidding contests are rarely held by utilities.
It also said limiting the total power from wind projects to 50 megawatts is “inconsistent” with federal law and FERC regulations, which require utilities to buy electricity from small, renewable-power projects that agree to sell for the “avoided cost” — a rate equivalent to what the utility would have to pay for the power elsewhere.
I just signed a letter calling on U.S. Senator Ron Wyden and Congress to renew the vital tax credit for wind and other sources of renewable energy. The Production Tax Credit (PTC) helps wind energy compete with highly subsidized fossil fuel industries, attracts investors for new wind projects, fosters innovation and employs tens of thousands of Americans in the clean energy economy.
Because of wind energy’s growing success, dirty energy billionaires, like the Koch brothers, campaigned to kill the renewable energy credit program. Congress is at a crossroads.
Will they support policies and industries that increase carbon pollution, fueling climate-related disasters? Or will they take action to promote safe, clean energy that will allow us to stabilize the climate?
As incoming Chairman of the Finance Committee, Senator Wyden will play a major role in deciding which direction Congress goes.
Please join me in telling Senator Wyden to renew the renewable energy tax credit now: http://act.engagementlab.org/sign/wind-credit_Wyden/?referring_akid=.227975.zAnFDm&source=taf
By signing the letter, you will send a message the future of our kids and and the stability of our climate are priorities that deserve urgent attention. Thank you for taking action!
PLEASE SIGN THE PETITION via Climate Parents | Senator Wyden: Restore support for wind power!.
Wind in MontanaMontana has wind, lots of wind. The state is ranked among the top five for wind power potential and several large, utility-scale wind farms are in operation. The total capacity of installed commercial wind turbines is more than 500 megawatts. In 2009, Montana ranked 9th in wind electricity generation by state, producing 820,924 MWh of electricity. More than 3 percent of the electricity generated in Montana that year came from wind, a percentage that is even higher today. Judith Gap Wind Farm, Credit: Montana Film OfficeThe following links offer more information about wind and wind development opportunities in Montana. Tax and Other Incentives Wind Data Sources Montana Wind Power Map Permit Requirements Developing Wind Energy on State Lands Basics for Small Wind Energy Systems Net Metering and Easements Wind Powering America U.S. DOE Wind Organizations Commercial Wind Projects Small Wind Installations in Montana AWEA Small Wind Turbine Market Report Wind Powering Montana Workshop Presentations Big Sky, October 3, 2001
Construction has started for the Fairfield Wind 10 MW project in Montana