By Associated Press - Friday, March 21, 2014

HELENA, Mont. (AP) - Montana’s Public Service Commission is improperly hindering small, renewable energy projects in the state, federal regulators said.

The Federal Energy Regulatory Commission said Thursday that the rules the PSC created to implement a federal energy conservation policy create an “unreasonable obstacle” for the projects seeking to sell power to utilities.

Part of the Public Utility Regulatory Policies Act of 1978 created an obligation for utilities to offer to purchase power from small, renewable power production facilities of 80 megawatts or less.

Several small power projects in Montana complained to FERC in June, arguing that Montana’s rules require some projects to win a competitive bid, but NorthWestern Energy doesn’t offer enough bidding opportunities.

FERC declined to take any enforcement action against the PSC, leaving the state regulators to change their rules or the small power projects to pursue the issue in court.

Mike Uda, a Helena attorney representing wind power producers, said he hopes the PSC will do the right thing and undo the rules.

“It was a perfect system that they had to prevent (renewable power) development,” Uda told Lee Newspapers of Montana. “Well, now FERC has told them that’s against the law.”

Uda said the rules, which make it difficult to get long-term contracts, left Montana renewable power projects with no way to construct, build or finance their projects.

Two Montana commissioners said attorneys for the PSC will review the ruling.

“It will be up to the judicial system to make any further disposition, if the (project developers) choose to pursue it,” said Claudia Rapkoch, a spokeswoman for NorthWestern Energy, Montana’s largest electricity and natural gas supplier.

The power projects disagree with a rule adopted by the Montana PSC that says an independent renewable power project larger than 10 megawatts can only get a long-term contract by winning a competitive bidding process.

The PSC also limited to 50 megawatts the total power that NorthWestern has to buy from independent wind projects up to 10 megawatts in size.

NorthWestern supports the rules, arguing that they prevent the company from being forced to accept contracts to buy more power than they need at above-market prices.

Small power producers argue the rules allow NorthWestern to ignore independent power projects in favor of developing their own projects.

“The bottom line is, you can’t have a utility that’s absorbing all of these opportunities (for project development) while blocking small, independent developers from doing the same thing,” said PSC member Travis Kavulla, R-Great Falls.

FERC’s ruling said requiring an independent producer to win a contract through a competitive bid is “an unreasonable obstacle,” especially since utilities rarely put contracts out for bid.

It also said limiting the total power from wind projects to 50 megawatts is inconsistent with federal law and FERC regulations, which require utilities to buy electricity from small, renewable power projects that agree to sell the power at a rate equivalent to what the utility would have to pay for the power from another source.

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