A bitterly divided Public Service Commission on Tuesday approved new prices for small “renewable” power projects in Montana selling to NorthWestern Energy, with Republicans arguing the decision will cost electric ratepayers more money.
Yet Democrats, who made up the 3-2 majority approving the rates, said the prices and standard contract are required by law and won’t increase rates by much, if at all. They also said the decision will help encourage development of small wind-power and other alternative energy projects across Montana.
“This is consumer protection, its good public policy,” said Commissioner Tom Schneider, D-Helena. “It’s consistent with the law; it’s the right thing to do.”
The commission, which regulates utilities in Montana, set price and contract terms for renewable power projects up to 10 megawatts in size, which is relatively small.
NorthWestern must buy the power and incorporate it into the electricity it sells to more than 300,000 Montana customers.
The requirements stem from federal and state laws that say utilities must offer legitimate prices and contracts to renewable energy projects – if the projects meet certain requirements.
Small wind-power and hydropower projects are expected to take advantage of Tuesday’s decision.
Small power developers have argued that they’re usually shut out by large utilities, which prefer to buy from large projects or their own plants.
“The whole idea behind (the law) is to allow these small, renewable entities into the market, where otherwise they’d be pushed out by the monopolists,” said Van Jamison, an energy consultant and wind-power developer from Helena. “If you’re a little guy, you get squashed like a bug.
“(The decision) is going to be very helpful to renewable energy development.”
The two Republican members of the five-member commission, however, said Tuesday the decision forces NorthWestern to accept contracts from small projects that may be higher-priced than power NorthWestern could purchase elsewhere in the market.
“The question is whether or not renewable energy development is so important that we’re going to go ahead, even though it’s going to increase costs to consumers in the state,” said Commissioner Doug Mood, R-Seeley Lake.
Commissioner Brad Molnar, R-Laurel, said wind power has hidden costs that are above the prices approved by the commission, and that consumers will end up paying those costs.
He also accused Democrats of rushing the decision to “beat the clock” before the Legislature convened in January. The decision may violate consumer protections in state law, Molnar said, and the 2007 Legislature might want to address it.
Schneider angrily rejected the Republicans’ claims.
“I am sorely tempted to just let this come to a vote, but I’m not going to let that diatribe you just launched be the last word,” he said to Molnar.
The prices approved by the commission are either at or below market, and any extra costs for integrating wind power into the mix of power sold to consumers is minimal, he said.
Schneider also said the consumer protections in a state law requiring more “renewable power” have nothing to do with the PSC order, and that federal law supersedes, anyway.
The commission order says small projects could choose a price of either $49.90 per megawatt-hour or a price tied to the highest hourly price that NorthWestern pays for power from other sources. The contract length could range from seven years to 20 years, depending on which price is chosen.
Right now, NorthWestern is selling power to its Montana customers for about $48 per mwh.
Schneider said that price will increase next year, making the $49.90 per mwh a very good price. He also said the smaller projects would reduce NorthWestern’s need to buy power on the open market, where prices are higher right now.
By Mike Dennison of the Missoulian State Bureau
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