Dispute centered on what small projects would pay utilities
State utility regulators Tuesday settled a dispute that could affect the future of small wind power projects in Montana, setting a charge that one project must pay when selling its electricity to the state’s largest utility.
On a 4-1 vote, the Public Service Commission voted to set the charge for Two Dot Wind, which has been waiting many months to settle the issue and iron out its contracts with NorthWestern Energy.
The PSC ruling allows Two Dot Wind to choose charges ranging from about $5 to $6 per megawatt-hour of electricity produced – an amount more than Two Dot felt it should pay, but less than NorthWestern proposed.
“It’s the best we could expect,” said Dave Healow of Billings, a partner in Two Dot Wind, which operates about 30 small wind power turbines near Two Dot, Martinsdale and Livingston. “We can live with that.”
Although Tuesday’s ruling applies only to Two Dot Wind, the method used to calculate the charge could be applied to other small projects, if they or NorthWestern request it, PSC staffers said.
The charge is for the cost of integrating wind power onto NorthWestern Energy’s electric system that serves 320,000 Montanans.
NorthWestern officials say they buy intermittent wind power as part of the electricity the company sells to customers, Because the wind isn’t blowing all the time that there is demand for electricity, NorthWestern must buy additional power from a dependable source to balance the system.
NorthWestern says wind power producers should pay the cost of that additional power.
Developers of small wind power projects have argued the cost of adding their power to the system is minimal, and that the charges proposed by NorthWestern aren’t supported by credible data and would kill development of small projects.
Tuesday’s decision struck a balance between the two positions.
Under current PSC rules, NorthWestern pays small wind power projects about $50 per megawatt-hour for power. With Tuesday’s ruling, NorthWestern will subtract $5 to $6 from that price for Two Dot Wind, depending on which of two options the project chooses.
The average residential customer on NorthWestern’s system consumes about 9 megawatt-hours of electricity a year.
Two Dot Wind’s projects can generate nearly 4 megawatts of power at full capacity. One megawatt is enough electricity for 240 to 300 homes.
Public Service Commissioner Ken Toole, D-Helena, said it’s important that the PSC “get this issue as close to right as possible,” to protect consumers while ensuring that wind-power producers get a fair price.
“This (wind) resource is something that presents a lot of challenges, but it also presents a lot of potential benefits,” he said.
Brad Molnar, R-Laurel, was the only commissioner to vote against the order, saying it still has the potential to shift costs of wind power to the consumer.
Two Dot Wind or any wind project could lock in a charge for many years that doesn’t cover the true cost of integrating their power, and the extra cost would be paid by consumers, he argued.
By Mike Dennison
Gazette State Bureau
23 April 2008
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