Crazy Mountain Wind
NWE seeks to pay indie power producers far less than it asks consumers to pay for damsPrint EmailDennisonBuy NowDennisonJuly 27, 2014 12:00 am3 CommentsHELENA – NorthWestern Energy and its regulator, the Public Service Commission, are rightly getting plenty of press on the company’s proposal to pay $870 million for a dozen hydroelectric dams.But another energy issue involving both entities is flying well under the radar — and has the clear potential to affect small, independent power projects in many parts of rural Montana.The issue is how NorthWestern buys power from these small wind and hydro projects, which, by law, are entitled to contracts if they meet certain requirements.When it buys power from these projects, NorthWestern includes the electricity in the mix it sells to its 340,000 electric customers in Montana.The project developers say their plants offer power that’s sometimes cheaper than what NorthWestern produces, that provides some competition to NorthWestern’s power-generation, and brings development to rural areas.If the PSC approves the dam purchase as proposed by NorthWestern, customers will be paying the company about $60 per megawatt hour for power produced by the hydroelectric dams it owns.But in recent filings before the PSC, NorthWestern is saying it should pay the independent projects only $40 a megawatt hour for their power.This discrepancy has small project owners hopping mad, and crying discrimination. The power company, they say, knows if such rates are approved by the PSC, the small power projects will never be built, because they can’t be financed at that price.NorthWestern, which has often resisted such projects, simply wants to own as much generation as possible, which means more profit for the company, and discourage any competing, independent producers, they say.Small-project developers also point their finger squarely at a majority of the PSC, saying it has repeatedly let NorthWestern get away with undermining federal law that requires small projects to be able to sell their power to the local utility, at a fair price.They note that the Federal Energy Regulatory Commission ruled in March that the PSC has taken illegal actions making it difficult or impossible for some small power projects to get a contract — and that the PSC has done little or nothing to correct those actions.PSC Chairman Bill Gallagher, a Republican from Helena, says he hasn’t seen a need to rush into a decision, in response to the FERC ruling, and that the PSC must fully consider howrates and conditions for the small-project contracts will affect the company and consumers.He also says he has a problem with how federal law grants “preferred status” to small power projects selling renewable power. Competition among projects should be the determining factor, he says.FERC, however, disagreed, saying the law requires contracts to be awarded at a rate set by the PSC, tied to what the utility would have to pay to buy or develop similar power elsewhere. It said the PSC cannot arbitrarily limit the amount of wind projects that get condtracts, and cannot require projects to enter into competitive bidding that, in reality, seldom occurs, and which they never win.Still, the PSC appears finally to be moving forward on the issue, likely holding a work session later this summer to respond to the FERC ruling and related items.Commissioner Roger Koopman, R-Bozeman, says he expects the PSC to change its rules to comply with the FERC ruling and look for a way to treat both the power company and the small-project developers equitably.“We do not want to send the message that we want to see NorthWestern’s portfolio include their own hydro plants but that it doesn’t have room for small independent power projects,” he says.NorthWestern also has acknowledged the FERC ruling, but, at the same time, is asking the PSC to lower the price NorthWestern must pay for a proposed 25-megawatt wind project near Fairfield and other projects, to the $40 per megawatt hour range.Company spokeswoman Claudia Rapkoch says the dams that NorthWestern wants to buy are more valuable resources than the small power projects, and therefore command higher rates.The company wants to ensure that any power it buys from small producers is at a price that reflects the current market, and can be reliably delivered, she says.Yet Commissioner Travis Kavulla, R-Great Falls, says actions by NorthWestern seem discriminatory against the small producers, and that he hopes the PSC will take a hard look at the issue.“I think we need to consider righting the situation so we can be fair to all players,” he says.Mike Dennison is a state reporter for Lee newspapers.
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.
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