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PSC likely to OK power integration charges  

State utility regulators indicated Tuesday they’ll support charging small wind-power projects in Montana for the cost of adding their power to NorthWestern Energy’s electric system that serves 320,000 Montanans.

But the state Public Service Commission, which regulates utilities, delayed final action until next week.

PSC rate analyst Will Rosquist said he’ll draft a proposal that includes a specific charge, which he expects will be less than the amount sought by NorthWestern Energy.

NorthWestern had proposed charging small projects anywhere from 16 percent to 44 percent of their entire income from power production.

Developers have argued that the cost of adding their power to the system is minimal or nothing at all, and that the charges proposed by NorthWestern aren’t supported by credible data and would kill development of small projects.

The charge is for “integration costs,” which are what the utility pays for additional power it says it needs to keep its electrical system in balance when accepting intermittent wind power.

Rosquist told the five-member PSC Tuesday he believes NorthWestern correctly claimed it has had to buy 25 megawatts of power to balance the system, after more wind power came on line in 2006.

Yet he disagreed with how NorthWestern proposed to allocate a share of that power-purchase cost to Two Dot Wind, a small wind-power project with turbines near Two Dot, Martinsdale and Livingston.

Rosquist said his analysis and proposal, which will be completed this week, will attempt to allocate the cost more accurately.

Commissioners, while they made no decision, did debate whether a final order would affect only Two Dot Wind or other small wind-power projects as well.

Commissioner Ken Toole, D-Helena, said NorthWestern will want to use the decision as a precedent for all such projects, but that the PSC should make it clear that any charge applies only to Two Dot Wind.

The cost of integrating wind power into the system can be different for different projects and can change with the power market, so using this case as a template could lock in prices that become obsolete, he said.

Two Dot Wind brought the case to the PSC after it could not reach an agreement with NorthWestern on its contract to sell power to the utility.

Yet Commissioner Brad Molnar, R-Laurel, said the PSC should recognize that the decision could be precedent-setting, because the company probably doesn’t want to argue every small wind-power contract before the commission.

Commissioner Bob Raney, D-Livingston, said the PSC should conduct a study that could determine the specific, long-range costs for adding wind-power projects to the system, “so we don’t need a contested case for every (small wind-power) project to get a rate.”

Rosquist said it shouldn’t be necessary to have a “complex, system-wide study” to determine costs for every small project, and that the PSC should be able to agree on a basic method to calculate the integration costs.

By Mike Dennison
IR State Bureau

Helena Independent Record

16 April 2008

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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