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PSC may change rule to benefit small wind-power projects

HELENA – State utility regulators have voted to review and possibly change a rule that small Montana wind-power projects say has hampered their development.

A rule change could make it easier for these small projects to get contracts to supply NorthWestern Energy, the state’s major electric utility, and thus build their project.

Greycliff Wind Prime, which wants to build a 25-megawatt wind project near Big Timber, asked for the rule change, saying NorthWestern has used to rule to “obstruct and interfere” with the project’s right to arrange a contract under state and federal law.

The state Public Service Commission voted 3-2 last week to re-examine the rule and has scheduled a November hearing on the issue.

Federal and state law says utilities must buy power from certain small, independent power projects using “renewable” fuel like wind or water. That power becomes part of the mix of electricity that the utility sells to its household and business customers in Montana.

State regulators set the price that the utility must pay for the power, based on various market factors.

However, the Montana PSC has a rule that says any renewable-power project bigger than three megawatts can get a contract only through a competitive bidding process set by the utility.

Last year, the Federal Energy Regulatory Commission said that rule imposes an “unreasonable obligation obstacle” for small projects to get a contract, because NorthWestern rarely held a bidding process.

Commissioner Travis Kavulla, R-Great Falls, who voted with the PSC majority last week to review the rule, said Tuesday that repealing or changing the rule is long overdue.

“I’m committed to solving the problem in some way, shape or form,” he told MTN News. “Retaining (the rule) is not legal. We need to change it somehow.”

Kavulla said the rule essentially violates state law on small-power production and contracts and clashes with PSC practices, which have allowed some small power projects to petition NorthWestern directly for a contract and price, without a bidding process.

Kavulla and commissioners Roger Koopman, R-Bozeman, and Brad Johnson, R-East Helena, voted to review the rule. Commissioners Kirk Bushman, R-Billings, and Bob Lake, R-Hamilton, voted to leave it intact.

NorthWestern Energy argued against changing the rule, saying any change is not needed.

In filings with the PSC this month, the company said small, independent power projects can get a contract without going through a bidding process, and that the PSC – not FERC – has discretion to decide the parameters for how those contracts are granted.

The company also said changing the rule will lead to more, not less, litigation on the contracts.