Montana PSC Slashes Power Rate For Proposed Wind Farm

Posted by Betsy Lillian on July 20, 2016 No Comments

The Montana Public Service Commission (PSC) has voted 4-1 to establish contract terms and conditions between Greycliff Wind Prime LLC and NorthWestern Energy for a proposed 25 MW wind farm in southcentral Montana.

In July 2015, says the PSC, Greycliff Wind Prime and NorthWestern Energy had entered into negotiations to establish contract terms for the project amongst themselves but were unable to reach an agreement. In turn, they required PSC mediation.

The Greycliff Wind Farm will move forward as a qualifying facility (QF) under the federal Public Utilities Regulatory Policies Act, a law that requires utilities such as NorthWestern Energy to purchase power from independent renewable generators under 80 MW at the utility’s avoided cost – the cost the utility would have incurred had it supplied the same amount of power itself or obtained it from another source.

The commission says Greycliff Wind Prime had requested to be compensated at a price of $53.39/MWh of electricity produced; NorthWestern Energy had proposed a price of $35.65/MWh.

Now, the PSC says the project will move forward with a contract length of up to 25 years at $45.49/MWh for the full length of the contract. In addition, NorthWestern has the right to curtail purchase of Greycliff’s power during light load hours – but only for safety purposes. NorthWestern had requested curtailment rights for economical reasons in addition to safety, but that request has been denied, the commission says.

However, the developer tells The Billings Gazette that the wind farm – which was proposed seven years ago – will most likely be axed because the $45.49/MWh price cannot make the project profitable.

Central to the dispute between NorthWestern Energy and Greycliff Wind Prime was the price that NorthWestern’s customers would pay for the electricity produced by the wind farm, says the PSC, which says it approved the rate based upon a calculation of the utility’s avoided cost.

“Unfortunately, in every QF docket, the commission is faced with trying to make sense out of federal policies that make no sense,” says Commissioner Roger Koopman, R-Bozeman. “The best the commission can do with unworkable law is try to strike a fair balance with the best information we currently have available, thereby providing as much consistency and predictability as possible to the renewable energy marketplace.

“Moreover, if QF developers are going to insist on fixed, long-term power purchase agreements, then the commission must strive to make its first priority the protection of the consumer by avoiding rates that appear to be insupportably high. Hopefully in our actions [yesterday], we struck a good balance that was fair to these dedicated wind entrepreneurs – while putting the legitimate interests of ratepayers first,” Koopman continues.

Commissioner Bob Lake, R-Hamilton, adds, “I am not at all satisfied with the high price that was approved, but the law requires the commission to mediate the negotiations of this contract and resolve any disputes between the parties. Federal law limited the amount of discretion the commission could use in setting the price consumers pay for this wind power, and we had very little authority to include additional benefits for consumers that we felt were necessary.”

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