NorthWestern Energy
WALTER HINICK/For the Gazette

Montana’s largest utility and renewable energy advocates are weighing legal options now that the state’s controversial new energy contract terms are final.

NorthWestern Energy and the Montana Environmental Information Center told The Gazette this week the latest price-setting contract terms created by the state Public Service Commission were unworkable.

The concern, say opponents, is that the contract lengths are too short for energy developers to recover development costs. 

"Damn right we're going to appeal," said Brian Fadie, clean energy program director for Montana Environmental Information Center.

Solar companies are still interested in doing business in Montana, despite 18 months of questionable decisions by state regulators, Fadie said.

Among the projects affected is a $110 million solar farm proposed for 480 acres north of Billings.

At issue are the PSC’s actions to reset the rates and contracts for Montana energy projects big and small. Commissioners have ruled that prices set by contracts should be guaranteed no longer than 15 years. Contract lengths had previously been for 25 years.

The shorter terms make financing difficult, if not impossible, according to NorthWestern and renewable energy advocates. 

Butch Larcombe, NorthWestern Energy spokesman, said the utility will need new generation in the future and that the terms set by the PSC make developing new power plants difficult. Additionally, because projects have to be paid off by the end of the contract, the cost passed to consumers will be higher. 

The PSC insists that shorter contracts are in the best interest of NorthWestern customers because prices set now might be higher than market rates in 25 years.

Initially, the PSC had targeted small, renewable energy projects for the shorter contract, but quickly applied the terms to all price-setting energy contracts.

NorthWestern joined the utilities in protesting after the PSC applied the same short contracts to the utility. NorthWestern contends the shorter contracts are damaging its stock value, and making it impossible to finance new power plants.

NorthWestern is Montana’s largest regulated public utility, servicing roughly half the state’s households. As a rule, customers of regulated utilities pay above market price for energy. The utility’s return on equity is limited by law.

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Agriculture and Politics Reporter

Politics and agriculture reporter for The Billings Gazette.