The Montana Supreme Court has ruled against state utility regulators and NorthWestern Energy for requiring a wind farm developer to pay $267 million to connect to NorthWestern’s transmission system.
Consolidated Edison Development planned to build wind farms in Wheatland, Pondera and Teton counties with NorthWestern Energy as its target customer under a 44-year-old law requiring utilities to purchase power from small generators.
Those plans ran aground when NorthWestern chose to bill CED $267 million for network upgrades. After the Montana Public Service Commission sided with the utility, CED sued. What followed was the latest case against regulators and the state’s largest monopoly utility concerning the Public Utility Regulatory Policies Act, or PURPA. The law requires utilities to buy power from qualifying alternative energy facilities, complete with contract lengths set by states, and as well as regulator-established rates for the smallest projects.
Commissioners have repeatedly imposed conditions on renewable energy businesses that violate PURPA law. The commission has created shorter contract lengths and pricing terms that made solar projects uneconomical, and even suspended PURPA hookup laws in Montana at the utility’s request.
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In the latest case, Montana’s Supreme Court ruled that the commission erred in requiring CED to pay for upgrades to NorthWestern’s transmission system. The costs went beyond what could reasonably be considered CED's share..
Most of the cost came from CED’s planned 75-megawatt wind farm in Wheatland County. In that instance, NorthWestern said it would need a new transmission line, a twin to one already servicing the area, at a considerable cost, first estimated at $128 million, then adjusted upward to $237 million.
NorthWestern argued that the transmission line was only necessary because of CED’s Wheatland wind farm.
But the transmission line NorthWestern expected CED to pay for was capable of serving more than CED’s Wheatland wind farm.
“In order to connect Wheatland, NorthWestern wants to construct a second transmission line of equal length and capacity, essentially doubling its transmission service and providing additional reliability to its network at CED’s expense,” wrote Justice Laurie McKinnon.
CED shouldn’t have to pay for more than the costs associated with servicing its own project, the court ruled.
There were wins in the ruling for NorthWestern and the PSC. The court didn’t grant CED’s request for a 25-year contract, which the developer argued it was entitled to, based on a previous court decision. The contract length on the table for CED is 15 years.
The court also concluded the commission is correct in assessing network upgrade costs, though commissioners erred in assigning the $267 million for those costs.