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PSC sets terms for small renewable energy projects
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PSC sets terms for small renewable energy projects

Solar farm

Survey markers are visible near a fence along Alkali Creek Road at the site of the proposed MTSUN solar farm northwest of Billings.

The Montana Public Service Commission is starting to unwind renewable energy policies ruled unlawful by the state Supreme Court.

Commissioners last week set 20-year contracts for renewable energy projects that qualify for favorable treatment under the Public Utility Regulatory Policies Act. More often referred to as PURPA, the policy requires that alternative energy projects smaller than 80 megawatts in capacity receive favorable prices and contract lengths from utilities. It’s the PSC that sets the terms.

Previously, the court ruled the Montana PSC set prices and contract lengths at levels uneconomical for facilities that qualified for PURPA treatment.

In addition to contract lengths, the commission established a $3.44 per megawatt hour bonus payment for PURPA projects that avoid carbon pollution. The Supreme Court had ruled the “carbon adder” had to be offered to qualifying facilities.

There was a twist to the bonus payment: Companies that accepted the carbon adder had to pass on tax-saving renewable energy credits to the utility buying their power. There were renewable energy companies that objected to passing the tax credit to their customers.

Left undecided was the price renewable projects 3 megawatts in capacity or smaller would be paid for their power. The PSC staff had recommended a price of $28.43 a megawatt hour, but commissioners held off.

Commissioner Tony O’Donnell, a Billings Republican, later explained that the price for small qualifying facilities could be influenced by a bill currently working its way through the Legislature. Commissioners decided to wait.

In December, a renewable energy project near Rapleje won a lawsuit against Montana’s PSC. It was the third time in a year a court had ruled the PSC ignored energy law, and even its own previous decisions, in setting prices for a wind or solar farm.

District Judge Kathy Seeley of Helena threw out most of the commission's work on Caithness Beaver Creek, a $500 million wind and battery storage project located near Rapelje. The judge, in her ruling, said the terms set by the PSC underpaid Caithness for the electricity it’s to sell to NorthWestern Energy, the state’s largest monopoly utility.

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