Utility Rate Changes Mean Cloudy Future For Montana Solar Power
Montana’s utility regulators took unprecedented action Thursday when they suspended price rates for solar energy. It's a win for NorthWestern Energy, but it could slow growth in Montana’s solar energy industry.
“We’ll call the question. All those in favor of the motion as amended signify by saying aye, opposed no. The motion carries 3-2 with commissioners Kavulla and Bushman dissenting.”
The vote was prompted earlier this year by NorthWestern Energy, the South Dakota-based utility company.
NorthWestern called on Montana’s Public Service Commission to take emergency action and suspend the price they are legally required to pay for solar energy generated by small companies.
The utility says that the $66 per megawatt hour rate is out of date, and they are being charged too much. It says that could mean $215 million in additional costs they’d have to pass on to their customers over the next 25 years.
On Thursday, the PSC agreed the rate was too high, and temporarily suspended it.
Commissioner Roger Koopman voted in support of the suspension. He says solar projects are swarming into Montana to take advantage of the high, legally-required rate.
"They look at Montana and they kind of flood in here thinking we can cut a really fat hog with this $66 rate, which is totally unfair to the rate payer and totally unfair to Montana businesses, totally unfair to Montana industries."
Koopman calls the 1970s-era federal law that requires utilities to buy from small alternative energy producers short-sighted. The law allows individual states to set the prices utilities have to pay for that energy.
Koopman says he’s not anti-solar energy.
"I think it is great that they are doing what they are doing. In many cases have made investments and have come to a point where the utility has a certain legal obligation to go forward with their projects, even if they are at too high a rate.”
The problem Koopman sees is that the federal laws requiring utilities to buy alternative energy are being made by people concerned about climate change. He favors a more free market approach.
"Those who believe that climate disaster is imminent and that it is caused by something they call a pollutant, CO2, which in fact everything I can tell is not; and I would argue has more benefit than detriment."
The PSC’s vote means small solar companies will now have to negotiate with NorthWestern on a case by case basis, until the commission establishes a new rate, to replace the old one.
Until then, Commissioner Travis Kavulla says NorthWestern’s starting bid for solar energy will likely be much less than the suspended rate. And that could prevent the solar projects from moving forward.
"It further entrenches NorthWestern’s monopoly position relative to a captive set of consumers that they serve. And it will presumably also have negative consequences on the development of utility scale solar projects in Montana."
Kavulla voted against the suspension of the rate, which he calls a tariff, today, and questioned the legal ground the PSC had in removing a rate without replacing it with another.
"So my preference would have simply been to keep the tariff, but update it based on newer market information. It's still not a perfect solution, because there is no perfect solution for questions like this. But it at least would have kept the door open and I think, been fair to all of the participants involved."
Other members of the PSC said any figure they would replace the old rate with now would be arbitrary.
The commissions will study and work to create a new rate for the cost of solar energy within the year.
Kavulla said that updated rate will likely come out in November or December.