Posts Tagged ‘Wind Energy’
Green power credits hot top topic in Helena « WINData LLC
- Published on Tuesday, 27 January 2015 17:21
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A silver inverter box in the basement of First United Methodist Church in Great Falls will take direct current from electricity generated by photovoltaic solar panels on the roof and turn them into alternating currents suitable for the power grid and powering the church.
Excess energy the system generates will cause the meter to spin backward, and NorthWestern Energy, the state’s largest utility, will purchase it from the church. Ken Thornton, an early backer of solar energy and the church’s building manager, led the project, with the PV panels installed in the summer. It will begin working next month.
“It’s funny, this is where they used to store the coal,” said Thornton one day last week, pointing out a nearby room where circles still remain on the ceiling indicating manholes where coal from wagons was once dropped into the facility and burned in boilers.
Power generation at the church is evolving thanks in part to net metering, a billing system in which surplus energy generated by a customer’s solar, wind or hydro-power system goes back on NorthWestern’s electric system with the customer receiving credit at retail rates. The 8-kilowatt rooftop solar system at First United will save an estimated $1,500 a year in energy costs.
Net metering has been around in Montana since 1999. It’s designed to encourage rooftop solar and other small renewable power generators that are easier on the environment. In Montana, customers of investor-owned utilities, such as the church can take advantage of it.
Expanding it to spur even more solar, wind and hydro projects at residences, farms and ranches, housing, businesses and even neighborhoods is a hot topic at the 2015 Legislature, spurred in part by the plummeting cost of solar.
“Renewable energy standards are kind of old hat,” said Kyla Maki, clean energy program director for the Montana Environmental Information Center, of the green power standards that dominated past energy policy discussions at the Capitol. “We’re now talking rooftop solar.”
The benefits of increasing net metering, Maki added, will go to the increasing number of people who are interested in investing in renewable energy systems on their property.
Some Republicans are joining conservation groups and companies in the renewable energy business in supporting an expansion of net metering in Montana.
“This is a freedom bill,” said Rep. Art Wittich, R-Bozeman. “It would allow for energy freedom, so you don’t have to buy power from a monopoly utility that decides how they are going to generate it. You can decided how you are going to generate your own power.”
Wittich is sponsoring a bill that would increase the allowable output of a renewable energy system eligible for net metering credits from the current 50 kilowatts to 1 megawatt.
Businesses that sell solar and wind systems see an opportunity to boost their businesses, create jobs and install more renewable systems at farms and ranches and multi-unit housing.
“You have to strike while the iron is hot,” said John Foster, a community wind specialist for Moodie Wind Energy in Great Falls, a subset of Moodie Implement, who sells wind and solar systems. “That’s really it. And net metering hasn’t been upgraded here in Montana since its inception.”
The legislation would provide incentive for farmers and ranchers to install larger systems that generate more power, making upfront investments more economical, Foster said. And allowing larger turbines will open up new geographic markets for him because they are more cost-effective even in areas with less wind, he said.
Foster also is a big supporter of a bill that would allow a customer generator participating in net metering to carry forward remaining unused kilowatt-hour credits from a solar or wind system and apply excess credits to separately metered accounts.
This bill is important to farmers and ranchers who often have several meters on their land for their home, out-buildings or water pumps for irrigation and stock water, Foster said. Right now, only a single meter can receive credits.
Efforts to expand net metering were shot down in 2013, Foster noted, but the “political climate is right” this session with more conservatives on board.
NorthWestern Energy, which has 345,000 electricity customers in Montana, sees the expansion as corporate welfare, said John Fitzpatrick, chief lobbyist for NorthWestern Energy.
Last week, Fitzpatrick told a legislative committee that net metering had grown to industrial proportions in other states with big box stores such as Walmart becoming the largest beneficiaries.
“Net metering is not a business plan,” Fitzpatrick said. ‘It’s a welfare program, and it’s the worst kind of welfare Democrats hate.”
About 1,200 residential and small business customers of NorthWestern currently have net meters, and the utility has been instrumental in the installation of net-metered systems in Montana over the past two decades, NorthWestern spokesman Butch Larcombe said.
“If anybody says we’re opposed to net metering, that just isn’t accurate,” he said.
Each customer of the utility pays a universal system benefits (USB) charge as a result of the original net metering legislation in 1999, he said, and that funding is used for a number of programs, including providing grants to those who install renewable energy systems, he said.
As a result, many of the people who have installed solar panels on their roof, or a wind turbine, are being subsidized by other NorthWestern customers, Larcombe said. Moreover, he added, when they use the electricity they generate to get a credit, it reduces what they pay to maintain the power grid even though they continue to use it, shifting the costs to other customers.
He also noted that NorthWestern is overpaying net metered customers because it buys the power at retail, which is a higher cost than the cost the utility would pay for the power on the market or the cost of generation.
A broader conversation is in order about the state’s net metering policy to make sure it’s fair to everybody, and that’s why NorthWestern opposes the legislation, Larcombe said.
Gary Wiens of the Montana Rural Cooperatives’ Association also brought up concerns about cost shift to a legislative committee last week.
Wittich doesn’t buy the cost shift argument.
Increasing the net meting cap means people could build larger renewable systems and get credit for them, he said. And ore people want to use solar at business, apartments, neighborhoods and residences, yet the criteria to take advantage of the credits is arbitrary, Wittich said. Right now, he said, only a fraction of the electricity produced in the state is “homegrown energy,” and that’s low compared to other states.
Wittich’s bill increasing the cap on the size of the home grown energy systems that could receive credits is just one of 10 or so bills aimed at expanding net metering in one form or another.
Based on lobbying for and against the bills, Wittich says net metering is among the top 10 issues of the legislative session.
The bill that would allow credits to be applied to separate meters is sponsored by Sen. Jennifer Fielder, R-Thompson Falls.
Fielder told members of the Senate Energy and Telecommunications Committee that she had taken an interest in homegrown renewable energy systems because they help Montanans become self-reliant.
“It promotes self-realization and energy independence for the little guy,” she said.
Mike Huber, a 45-year-old rancher who lives south of Great Falls, said he’s investigated putting up a wind turbine. But he’s refrained because right now he could only receive credits for one meter if he invested in a renewable system. But he has six meters alone at one address and “obviously I can’t afford to put a solar or wind generator at each one.”
He supports legislation allowing excess credits to be applied to additional meters.
Rep. Randy Pinocci, R-Sun River, is sponsoring legislation that also would increase the cap on the size of renewable systems that could receive credits in territories served by rural electric cooperatives.
Pinocci said he decided to take action in the Legislature because he wanted to put a larger wind turbine on his property, but couldn’t because of a cap under the current rules. He called the cap “a joke” because smaller turbines do not produce enough energy for farming and ranching operations to justify the investment.
“The bigger your wind turbine, the easier it is to pay for it, and the more money you make,” he said.
Renewable energy has been seen a Democratic issue, Pinocci said, but Republicans are getting involved now and he doesn’t care whether it’s a Republican of Democratic issue. In his view, limits on the size of renewable energy projects in areas served by rural electric cooperatives is discouraging investment in renewable projects in rural areas. Pinocci, a freshman, said lawmakers shouldn’t be influenced by lobbying from NorthWestern or rural cooperatives.
“If any representative votes against my bill, I believe the constituents are going to say, ‘No way, what you did was a mistake,’” said Pinocci.
Conservation groups such as MEIC, the Northern Plains Resources Council and renewable energy organizations are rallying the troops in support of the legislation. The Helena-based Alternative Energy Resources Organization, or AERO, put out an “action alert” about a hearing today in the Senate Energy and Telecommunications Committee about a bill from Sen. Mike Phillips, D-Bozeman.
The Montana Neighborhood Net Metering Act would allowed neighborhood energy facilities to connect to a utility’s distribution system. Businesses and individuals could then buy into the system.
First United Methodist Church installed the 8-kilowatt PV panels this past summer . In the future, Thornton hopes to put more panels up to increase the output to 25 to 30 kilowatts, which would cover the church’s yearly electricity bill of $5,000. The cost of the first phase was $15,000.
Over the past five years, the price of solar panels has dropped 80 percent as the result of the recession and competition from China, Thornton said. That and innovations in the manufacturing processes has resulted in less expensive and more efficient solar panels, he said.
“I’ve been doing this for 30 years,” said Thornton, 60, who holds a mechanical engineering technology degree from Montana State University. “So at this point, it’s becoming real economical to put solar panels on buildings.
The church’s roof sits at a 45-degree angle, and it faces south. The ideal slope for catching the sun’s rays in Great Falls is 47 degrees.
“Oh, it’s perfect, Thornton said.
The amount of electricity generation allowed under the current net metering system for NorthWestern customers is adequate, he said. The church does not need to install a larger system to meet its electricity needs, Thornton said. He wants to make sure Montana doesn’t lose the net metering it already has for residential and small commercial systems.
But Thornton supports the neighborhood net metering legislation, and the bill that would make it easier for net metering projects in rural areas.
Reach Tribune Staff Writer Karl Puckett at 406-791-1471, 1-800-438-6600 or email@example.com. Twitter: @GFTrib_KPuckett.
Clearing Up – Greenfield Wind, NorthWestern Ask MPSC to Reconsider Contract
- Published on Monday, 19 January 2015 16:51
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Greenfield Wind and NorthWestern Energy have asked the Montana PSC to reconsider its rejection of a power purchase agreement for the output from Greenfield’s 25-MW wind project, which is under construction near Fairfield, Mont.
By a 3-2 vote, the PSC in December refused to approve the contract, even though most parties in the case supported the deal and none opposed it [Docket No. D2014.4.43].
“This motion presents a critical question of whether the commission will approve a reasonable long-term avoided cost negotiated between a large QF and NorthWestern, or whether the commission will subject the parties, and quite possibly the commission itself, to further litigation,” Greenfield said in its Jan. 8 filing, which called the decision “unlawful, unjust and unreasonable.”
The decision was made during a Dec. 16 commission work session after considerable discussion of the perceived pros and cons of the 25-year deal, which included a net rate of about $50.49/MWh if the developer paid NorthWestern for wind integration, or $53.99/MWh if Greenfield delivered a wind-integrated product.
During settlement discussions with NorthWestern, Greenfield agreed to delay the commercial on-line date for the full contract rate until 2016, in light of the utility’s near-term long position It would receive $19.99/MWh, minus integration costs, for any generation delivered in 2015; its currently scheduled on-line date is Oct. 15, 2015.
NorthWestern initially asked the commission in April 2014 to set terms and conditions of the PPA because it was not selected through an all-source solicitation, as required under a commission rule that FERC previously determined was inconsistent with PURPA regulations (CU No. 1639 ).
“NorthWestern is in the untenable position of being constrained by an administrative rule that FERC has found to be inconsistent with federal law,” the utility said.
The rates and terms in the stipulation “are consistent with, and likely significantly below, any reasonable current estimate of NorthWestern’s actual avoided costs,” Greenfield said in its Jan. 8 petition.
MPSC staff’s projections indicated the settlement rate would save NorthWestern’s customers between $5.9 million and $10.6 million over the life of the project, compared to the two most reasonable alternative avoided-cost benchmarks, Greenfield also said in its filing—and pointed out that the rates were lower than all five of the benchmark rates staff used in its evaluation.
In fact, the market prices underlying the negotiated rate and staff’s benchmarking analysis came from NorthWestern’s 2013 least-cost plan, and are the same prices used to evaluate whether the utility’s recent acquisition of PPL Montana’s hydro resources was a least-cost resource, Greenfield said.
Commissioner Travis Kavulla, who voted to approve the stipulation, said during the Dec. 16 work session that commission staff used more analysis in reviewing the Greenfield deal than NorthWestern did to assess the value of its $870-million purchase of PPL Montana’s hydro portfolio (CU No. 1662 ), under which power is priced at about $57/MWh.
That acquisition was also approved outside of an all-source solicitation, Greenfield’s filing noted.
Rejection of the negotiated rate will “launch the parties and the commission back into unnecessary and costly litigation,” Greenfield said, and could result in rates that are significantly higher than those included in the stipulation.
Greenfield also said the apparent rationale for rejection of the unopposed stipulation “rests upon unlawful discrimination against QF projects, which combined with other recent events would constitute an actionable violation of federal and state law if allowed to stand.”
The notice of commission action denying the settlement did not articulate the commission’s reasons for denial, NorthWestern pointed out in its filing in support of Greenfield’s petition. Besides reconsideration, NorthWestern asked the commission to provide the rationale for its decision.
Chair Bill Gallagher led the opposition to the settlement during the commission’s work session.
“I am dissatisfied that this stipulation is fair and reasonable,” Gallagher said during the meeting. “I like stipulations to come after hearings.”
Gallagher added that the record was insufficient and went on to criticize FERC’s PURPA regulations, likening them to a program that would provide unskilled people with incentives to become housepainters and then require homeowners to purchase their services over those of more qualified painters.
Gallagher also warned that if the PSC approved the settlement, there would be a line of developers down the hall applying for QF status. “What are you going to do with the ones that follow? NorthWestern would end up selling this unneeded power at a loss,” he said, adding that “these new QFs will come in and offset our native power.”
Gallagher has since retired from the commission and was replaced in January by Brad Johnson, who was elected in November 2014.
Greenfield is hoping the change in chair may result in a different outcome.
“Any commissioner that is going to obey federal and state law and be responsive to recent FERC and state court rulings and has the interest of Montana ratepayers will vote in favor of this—there is no other vote,” Greenfield spokesman Marty Wilde told Clearing Up.
“This is a clear case of where federal and state law—and the Montana commission’s own rulings—dictate what the decision needs to be.”
Then there’s the economics, Wilde said—the commission approved the PPL Hydro purchase at about
$58/MWh, and “we’re looking at $50.49/MWh.
“We’re pretty hopeful that once they reconsider, maybe with the fresh eyes of Brad Johnson, they’ll be clear on what the right decision is.”
Montana PSC attorney Jason Brown said staff will likely waive the requirement for action on the motion within 10 days of filing—otherwise the petition would be automatically deemed denied—so the commission can take it up later this month.
If the commission rejects the petition and settlement, there’s a good chance the case will be continued and heard on its merits, Brown said.
The PSC could also agree to reconsideration and then issue an order approving the settlement [Jude Noland].
Copyright © 2015, Energy NewsData Corporation
Clearing Up • January 16, 2015 • No. 1680 • Page 11
Greenfield Wind and Northwestern Energy place Unopposed Joint Motion to Settle Before the Montana PSC
- Published on Monday, 12 January 2015 07:20
- 0 Comments
Greenfield Wind, LLC and NorthWestern Energy presented an unopposed joint settlement to the Montana PSC for approval in November 2014, and although there was not opposition at the hearing on December 1st, the settlement was inexplicably denied in mid December by an 11th hour surprising reversal ruling.
The December 16th Decision denying the Unopposed Stipulation appeared to result from past commission chairman Gallagher, who did not attend the December hearing, placing his personal opinion and politics ahead of Federal and State law and ahead of the best interests of Montana rate payers.
In response, on January 8th, Greenfield Wind filed a Motion for Reconsideration, which is currently before the Montana Public Service Commission and presents a critical question of whether the Commission will approve of a Qualifying Facility negotiating with NorthWestern to obtain reasonable long-term avoided cost rates as directed by PURPA and supported by recent rulings from FERC and Montana State Courts, or whether the Commission will subject the parties, and quite possibly the Commission itself, to further litigation.
After eight months of work on the contested case and the settlement, the December 16th last minute reversal decision to deny the unopposed settlement was not only surprising but unlawful, unjust, and unreasonable, and should thus be reconsidered for the following reasons:
- First, the record abundantly supports a conclusion that the rates and terms contained in the Stipulation are consistent with, and likely significantly below, any reasonable current estimate of NorthWestern’s actual avoided costs. The Commission Staff’s analysis demonstrated that the Settlement rate would save between $5.9 and $10.6 million over the life of the project compared to the two most reasonable alternative avoided cost benchmarks. Rejection of the Unopposed Settlement unreasonably deprives NorthWestern’s customers of the benefits of these favorable rates.
- Second, Greenfield Wind submits that the avoided cost rates will be significantly higher if Greenfield is forced to fully litigate its claim to a legally enforceable obligation (“LEO”) at the Commission and any subsequently necessary judicial proceedings – thus subjecting NorthWestern’s customers to higher rates than those offered in the Unopposed Stipulation.
- Third, the apparent rationale for rejection of the Unopposed Stipulation rests upon unlawful discrimination against QF projects, which combined with other recent events would constitute an actionable violation of federal and state law if allowed to stand.
- Fourth, the rejection of the negotiated rate between NorthWestern and Greenfield will launch the parties and the Commission back into unnecessary and costly litigation.
If a state chooses to regulate electric utilities, it must implement the Federal Energy Regulatory Commission’s (“FERC”) regulations under the Public Utility Regulatory Policies Act of 1978 (“PURPA”) (16 USC § 824a–3(f)(1); FERC v. Mississippi, 456 U.S. 742, 751, 102 S.Ct. 2126, 2133 (1982)).
FERC’s regulations, which are adopted by ARM 38.5.1902(1), require state commissions to implement PURPA in a way that requires a utility to purchase energy and capacity from QFs at the full avoided costs of the purchasing utility (Amer. Paper Institute, Inc. v. Amer. Elect. Power Serv. Corp., 461 U.S. 402, 415-18 (1983)).
The Montana Supreme Court has explained: “PURPA requires large utilities to purchase energy from smaller qualifying facilities at rates that allow the small facilities to become and remain viable suppliers of electricity.” (Whitehall Wind, LLC v. Montana Pub. Serv. Comm’n., 355 Mont. 15, 16-17, 223 P.3d 907, 908-09 (2009)).
FERC’s regulations also permit a QF and an electric utility to enter into a contract containing agreed-to rates, terms, or conditions. 18 C.F.R. § 292.301(b). FERC has explained that “a contracted-for-rate would never exceed true avoided costs and would thus be consistent with PURPA.” (Cedar Creek Wind LLC, 137 FERC ¶ 61,006, at n. 73 (2011) (citing Order No. 69, 45 Fed. Reg. 12,214 (1980))).
This rule “recognizes that the ability of a qualifying cogenerator or small power producer to negotiate with an electric utility is buttressed by the existence of the rights and protections of [FERC’s] rules.” (45 Fed. Reg. at 12,217)
FERC has rejected state implementation schemes that stand as an impediment to such amicable contract formation (Grouse Creek Wind Park, LLC, 142 FERC ¶ 61,187, at P 40 (2013)) and some courts have reversed state commission decisions rejecting agreed-to PURPA rates (Pub. Util. Commn. Of Texas v. Gulf States Utilities Co., 809 S.W.2d 201, 208-09 (Texas 1991)).
Montana’s “mini-PURPA” further instructs the Montana PSC. It declares: “Long-term contracts for the purchase of electricity by the utility from a qualifying small power production facility must be encouraged in order to enhance the economic feasibility of qualifying small power production facilities.” (M.C.A § 69-3-604(2) (emphasis added)).
The Commission’s own rules provide, “Each utility shall purchase available power from any qualifying facility at either the standard rate determined by the commission to be appropriate for the utility, or at a rate which is a negotiated term of the contract between the utility and the qualifying facility.” (ARM 38.5.1905(2)).
However, the MPSC has also implemented a rule that requires QFs sized over 3 megawatts (“MW”) to prevail in an all-source competitive solicitation to obtain a long-term contract (ARM 38.5.1902(5)). Because NorthWestern has not been compelled to regularly hold such solicitations, FERC declared this rule constitutes a failure to implement PURPA’s bare minimum requirement to make long-term avoided cost rates available to QFs (Hydrodynamics, 146 FERC ¶ 61,193, PP 32-35 (2014)).
The Montana courts have likewise faulted the Commission for failure to provide reasonable avoided cost rates to QFs (See Whitehall Wind, LLC, 355 Mont. at 18, 223 P.3d at 909 (reversing rate determination where “the PSC’s own staff economist contradicted the PSC’s rate determination”)); (Whitehall Wind, LLC v. Montana Pub. Serv. Comm’n, Cause No. DV-03-10080, Remand Order (Mont. 5th Dist., May 21, 2014) (again reversing the MPSC’s subsequent order)).
PROCEDURAL AND FACTUAL BACKGROUND
Greenfield has been seeking a long-term contract under PURPA with NorthWestern since 2010. It has spent substantial sums of time and money to develop its wind project in reliance on federal and state law. But those efforts have been stymied since at least 2010 by the Commission’s rules prohibiting such long-term contracts for projects over the eligibility cap for standard rates and outside of the 50-MW cap for wind projects.
NorthWestern states that it filed the original Petition in this case at the PSC because the Commission has not authorized it to enter into long-term contracts outside of an all-source solicitation. In the absence of a Commission-approved methodology to calculate long-term rates for Greenfield Wind’s project, the parties engaged in extensive and costly discovery and contested proceedings over the most appropriate methodology.
Through the Commission’s proceedings and discovery processes, Greenfield was able to review NorthWestern’s data and calculations. In doing so, Greenfield recognized that with some concessions on Greenfield’s part the gap between the rate proposed by NorthWestern and the rate proposed by Greenfield could largely be bridged. Additionally, a contested transmission cost issue became moot when Gaelectric’s senior transmission requests were withdrawn and removed from the transmission queue – further bridging the gap between the parties.
Thus, Greenfield and NorthWestern were able to negotiate a rate that was derived using NorthWestern’s method of estimating the avoided costs. The net Stipulation/Settlement rate is approximately $50.49/MWh if Greenfield pays NorthWestern for integration, or $53.99/MWh if Greenfield delivers a wind integrated product. Due to NorthWestern’s near-term long position, Greenfield agreed to delay the commercial online date for the full contract rate until 2016, and will only be paid $19.99/MWh (minus integration costs) for any generation delivered in 2015.
In light of the fact that NorthWestern is a regulated utility and the Commission has approved no methodology to calculate large QF rates, such approval is necessary for the project to move forward without further delay.
On December 1, 2014, the Commission held an evidentiary hearing on the Stipulation. Multiple rounds of testimony from Greenfield and NorthWestern and all data requests were admitted into the record for purposes of evaluating the Stipulation. All of NorthWestern and Greenfield’s witnesses were made available for live or telephonic cross examination. The Montana Consumer Counsel (“MCC”) and LEO Wind, Inc. both attended the Stipulation hearing. Neither of them opposed the Stipulation or requested post-hearing briefing to challenge its terms.
On December 16, 2014, the Commission held its work session on the Stipulation.
The Commission’s Staff presented a memorandum summarizing the terms of the Stipulation, including five market benchmarks against which to compare the Stipulation rate. Each of Staff’s five benchmark rates were higher than the Greenfield Wind rate. Thus, Commission Staff recommended approval of the Stipulation.
The PSC Commission’s Staff explained: The reasons to approve, would be that the rate appears to reasonably approximate avoided costs. It would avoid expenditure of further resources by all parties, including the Commission, on this matter. It would signal that NorthWestern can negotiate with large QFs, and that the PSC will implement rates for large QFs.
In fact, the Commission’s Staff explained that its portfolio comparison benchmark analysis, using the same inputs used to model the PPL Montana Hydroelectric Projects (“PPL Hydros”), demonstrated that “having Greenfield energy as part of the portfolio saves the portfolio costs.”
But the Commission voted to reject the Stipulation by vote of three to two.
Former Commissioner Gallagher, as well as Commissioners Koopman and Bushman voted against the Stipulation, while Commissioners Kavulla and Lake supported approving the settlement.
==January 12, 2015
Marty Wilde, WINData LLC
PSC asked to reconsider Fairfield wind farm
- Published on Friday, 09 January 2015 05:50
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The developer of a proposed wind farm near Fairfield asked the Montana Public Service Commission on Thursday to reconsider its prior denial of a power purchase settlement with NorthWestern Energy, which has blocked the project.
Greenfield Wind LLC of Fairfield hopes to construct the wind farm by this fall, said Martin Wilde. Greenfield is a partnership between Wilde, the CEO of Fairfield-based WINData, LLC and Foundation Wind Power in San Francisco.
The wind farm’s 15 General Electric turbines would produce 25 megawatts of electrical generation capacity. That’s enough to power 5,000 to 7,000 homes annually. The turbines would be 262 feet tall, which is 26 stories, with 328-foot-long rotor blades, a bit more than a football field. That would make them the largest turbines in Montana, Wilde said.
The Greenfield wind farm is planned eight miles northeast of Fairfield, just east of the 10-megwatt, six-turbine Fairfield wind project. That project became operational May 17. WINData and Foundation Wind Power also partnered on that project, and NorthWestern is purchasing that power.
Greenfield will be located on dry, non-irrigated land leased from four landowners.
PSC members voted 3-2 Dec. 16 to reject the settlement agreement on the power purchase price between NorthWestern and Greenfield.
Wilde said the decision came as a surprise, and Greenfield on Thursday filed a motion asking the PSC to reconsider. NorthWestern also filed a motion asking the PSC to clarify why it denied the power purchase agreement.
“It gives Greenfield the opportunity to basically take a bite at the apple with a different proposal,” said Brad Johnson, the chairman of the PSC.
Johnson was not on the commission during the first vote.
Wilde is hoping for a different result the second time around.
The 25-year purchase agreement calls for NorthWestern purchasing the power for $53.99 per megawatt hour, Wilde said. Greenfield would pay $3.50 for wind integration services, making NorthWestern’s net purchase price $50.49 per megawatt hour. Wind integration is necessary for grid reliability.
NorthWestern used a price of $58.32 per megawatt hour as a benchmark when it asked for approval from the PSC to purchase hydroelectrical facilities from PPL Montana, Wilde said.
“We’re coming in cheaper than the benchmarks, and that discount flows to NorthWestern’s ratepayers,” he said.
Along with the clean power, construction of the wind farm will produce local jobs for engineers, electricians, cement companies and surveyors and taxes for Teton County, he said.
It would be built by Dick Anderson Construction out of Great Falls, which also built the first wind farm.
As a rule of thumb, it costs $2 million a megawatt to build a wind farm, Wilde said.
John Hines, NorthWestern’s vice president of supply, said Greenfield came to NorthWestern energy with the project.
“We believe our portfolio is getting fairly full for this type of energy — intermittent wind energy,” he said.
The company already is purchasing about 250 megawatts of wind power, or about 14 percent of its total energy requirements, Hines said
However, the utility is obligated to enter contracts with “qualifying facilities” such as Greenfield as a result of a President Jimmy Carter-era federal law designed to diversify the energy portfolio of utilities and stimulate production of alternative energy, he said.
The settlement agreement before the PSC, he said, is “a good faith effort on our part.”
“We can’t go forward without regulatory approval,” Hines said.
The cost of the wind power is higher than market alternatives, he said. The impact of the purchase from Greenfield on ratepayers hasn’t been calculated, but would be very small, he said.
Reach Tribune Staff Writer Karl Puckett at 406-791-1471 or kpuckett@greatfallstribune
.com. Twitter: @GFTrib_KPuckett.
MISSOULIAN EDITORIAL: PSC should approve wind power deal
- Published on Sunday, 04 January 2015 13:03
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December 28, 2014 7:00 am
Even as one of the biggest wind energy projects in Montana broke ground near Bridger this month, the state’s Public Service Commission was deciding to deny a contract between NorthWestern Energy and the developers of a new wind power project. That decision, if allowed to stand, bodes ill for new wind development in Montana in the immediate future.
Greenfield Wind is proposing a 25-megawatt wind-power project near Fairfield. The agreement between NorthWestern and Greenfield would allow the energy company to buy power from the wind farm for $54 per megawatt-hour for the next 25 years. That, as reports have pointed out, is less than the cost of power from the 11 hydroelectric dams NorthWestern bought earlier this year.
The PSC approved that purchase, which will provide power at a rate of about $57 to $58 per mWh — even though the deal could cost ratepayers as much as $800 million in excess costs, according to one expert analysis, and will mean a direct rate increase for NorthWestern’s electric customers of more than 5 percent.
With that recent history, it was perplexing to see the PSC get hung up on the wind power agreement on a 3-2 vote. Apparently, the three commissioners who voted against the deal have concerns that NorthWestern was putting itself on the hook to purchase energy it may not need.
NorthWestern, not surprisingly, disagrees with the commissioners’ conclusion. What is somewhat surprising is that the PSC’s own staff, after reviewing the agreement, noted that adding the wind energy from this contract to NorthWestern’s portfolio would actually result in lower costs for consumers.
It’s also worth mentioning that even as the PSC was deciding against this deal, wind power developers across the nation were seizing an opportunity afforded by Congress in the final days of the session through a wind production tax credit. The credit applies only to new projects started this year, and with only a few days left in the year, developers are hurrying to get their shovels in the ground.
The developers of the 120-turbine Mud Springs Wind Ranch in Carbon County were among them. Thanks to the tax credit, the $550 million project stands to recoup 2.3 cents for every kilowatt hour of power it produces.
Meanwhile, U.S. Sen Jon Tester, D-Mont., was among those calling for a long-term extension of wind production tax credits starting in the new year. He seems to understand that such incentives help encourage new wind power development, and that Montana, as one of the places in the nation with the most wind potential, is in a prime position to gain from increased wind development.
This kind of activity at the state and federal level helps point which way the wind is blowing. But even setting all that aside, PSC Commissioners Bob Lake, who represents the region that includes Missoula, and Travis Kavulla found nothing in the duly negotiated contract between NorthWestern and Greenfield worth killing the deal; rather, they found that the mutually beneficial settlement to be in the best interests of NorthWestern’s 340,000 ratepayers in Montana.
Greenfield officials have said they plan to ask the PSC to reconsider its decision. This time, the three commissioners who voted to deny the deal — Roger Koopman, Kirk Bushman and commission chair Bill Gallagher — ought to pay closer attention to the information provided by their own staff and the arguments of their colleagues on the commission.