State Rule Hinders Wind Power Projects, Greycliff Wind Energy Tells PSC
A startup that wants to build a 25 megawatt wind farm near Greycliff in Sweet Grass County claims it’s been frustrated at every turn by resistance from NorthWestern Energy and the state’s all-Republican Public Service Commission.
Tuesday morning Greycliff Wind Energy appealed to the PSC to throw out an existing state rule that it says the electric utility has used to stymie the efforts of wind power developers.
“The competitive solicitation requirement, as Northwestern would like to maintain it, at least seemingly from their comments, is a path to nowhere. It doesn't exist."
That’s Michael Uda, a Helena based attorney representing Greycliff Wind Energy. Current state rules force independent power-generating companies to go through a competitive bidding process in order to be able to sell power to Northwestern Energy, for any project over three megawatts.
That’s about as much as two wind turbines produce, and Uda says the rule effectively blocks his company from developing a profitable wind farm.
“There are essentially two paths to a contract in Montana: you either have a competitive solicitation process that's never held, and which is not performed according to the requirements of the rule when it was held," says Uda. "Or you can get a standard offer of three megawatts and no one will build it that. Now you won't get small hydro at that, you might get small solar at that, but you will not get wind projects that are three megawatts or less”
Uda says Northwestern will approve shorter-term wind power contracts, But, he says, a bank wants to see a long-term purchase contract before lending money for a wind farm project.
“The only way that the vast majority of developers can actually finance construct and operate a project is pursuant to a long term contract," says Uda. "They need a revenue stream. Banks other financial institutions will not land on a short-term rate. That is basically a way of saying go away. That is not a reasonable position to take”
Northwestern’s position was represented by attorney Al Brogan. He says at this point the electric utility doesn’t mind if the rules are re-written and the competitive bidding clause is thrown out, although earlier media reports said the company was opposed to doing that.
Brogan says the electric company doesn’t want to see its customers stuck with an expensive bill for over-priced wind energy.
“We don't really have a dog in the fight," says Brogan. "We buy power from QFs, we sell it to our customers at exactly the same price. So we don't really have a fight about that but we want to make sure that the rules protect both sides.”
QF stands for Qualifying Facility, a technical term for a privately owned company that provides electricity generated from solar, hydro or wind sources.
Federal law says electric utilities have to buy power from QFs. Brogan says Northwestern Energy has been doing that, despite claims to the contrary from Greycliff.
“With these rules in in place over the last several years we purchased or entered into contracts with lots of QFs and including mostly wind QFs.”
Most of those contracts, Brogan says, were not done through the competitive bidding process that Greycliff claims is the stumbling block to its business getting off the ground.
“There's also the option if the QF and the company, the utility, cannot agree they can petition the Commission to set the terms and conditions and we've done that several times."
The Tuesday morning hearing lasted over an hour. The five public service commissioners did not ask questions or issue a ruling. They have until late March to do that.
If the ruling goes as the wind-energy firm wants, it could pave the way for more alternative energy suppliers to set up shop in Montana.
This story has been update to correct the spelling of Greycliff and provide the audio file of the report used in the text.