House OKs bill limiting utility contracts for small-power producers

2013-01-29T18:19:00Z 2013-01-30T15:14:06Z House OKs bill limiting utility contracts for small-power producersBy MIKE DENNISON Gazette State Bureau The Billings Gazette
January 29, 2013 6:19 pm  • 

HELENA — The Montana House on Tuesday endorsed a bill that would restrict the size of small, independent power projects that can get special contracts with electric utilities like NorthWestern Energy.

The sponsor of the bill, Rep. Keith Regier, R-Kalispell, said his House Bill 188 may be “the most important energy bill before this Legislature” because it will reduce costs for the utility and its Montana consumers by not forcing NorthWestern to buy power at above-market prices.

But a Public Service commissioner opposed to the measure said Tuesday in an interview that HB 188 is an attempt by NorthWestern to block the development of any future power projects that it doesn’t own.

“The bill is an enormous giveaway to NorthWestern Energy, and its real effect is to immunize the monopoly utility against competition,” said Commissioner Travis Kavulla, R-Great Falls.

The House tentatively approved the bill on a 63-37 vote. After a final vote Wednesday, the bill is likely headed for the Senate. Tuesday’s vote mostly followed party lines, with Republicans in favor, although six Democrats voted for the measure.

HB 188 would apply to small, independent power projects that provide electricity to Northwestern for resale to the utility's 300,000-plus Montana customers.

Under federal law, NorthWestern must buy power from these projects — many of them wind projects — if they meet certain requirements. However, state regulators set the price and guidelines for the contracts.

HB 188 says the Public Service Commission can set rates only for projects that are up to three megawatts in size — a very small project. It also says the PSC cannot set contracts for any more than a total of six megawatts of projects in a year.

Under the PSC’s current rules, it can set rates for projects up to 10 megawatts in size, and there is no limit on the total projects.

The bill says any independent project larger than three megawatts can get a contract with a utility only through a competitive bidding process, against other potential projects.

Rep. Wylie Galt, R-Martinsdale, one of four Republicans to vote against HB 188, said he owns a wind farm on his property, and that passing HB 188 would kill any chance of expanding it. A 10-megawatt project is only six towers, and anything below that amount “doesn’t meet the economies of scale,” he said.

Supporters of the bill said the law and PSC rules have forced NorthWestern to buy power from small wind farms and other independent projects at above-market prices, and that those costs are passed on to consumers.

“They have been the most expensive part of NorthWestern Energy’s portfolio,” Regier said. “If (this bill) is enacted into law, ratepayers will be protected.”

Kavulla, who listened to the debate in the House, said supporters of the measure unleashed “a tidal wave of misinformation” about small, independent projects and their cost.

The projects are a tiny portion of the overall energy purchased by NorthWestern, and the current “standard offer” contract is about $48 per megawatt hour for the next 25 years, he said. It may be above market now, but probably won’t be over time, he said.

NorthWestern wants to develop its own projects, which are more profitable for the company, Kavulla said.

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