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Wind-power developer asking PSC to set rate on contract with NorthWestern

Wind-power developer asking PSC to set rate on contract with NorthWestern

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HELENA — The proposer of two small wind-power projects near Chester said Wednesday he hopes state regulators set a higher rate for the projects’ power, after NorthWestern Energy refused to negotiate what he felt was a reasonable purchase price.

“They gave us take-it-or-leave-it proposals that made it impossible for us to build the project,” said Bret Kenfield, an Oregon accountant who’s originally from Chester. “I either had to walk away or go to the Public Service Commission for help.”

The PSC, which regulates utilities and enforces state and federal law on small renewable-power contracts, wrapped up a three-day hearing Wednesday on Kenfield’s request to set a price NorthWestern should pay for his projects’ power.

Kenfield is asking that NorthWestern pay about $92 per megawatt hour for the power, or about 30 percent higher than offered by NorthWestern. He said Wednesday that he believes that NorthWestern would have to pay close to that amount if it were to develop renewable power on its own or buy similar power on the market.

Kenfield is proposing two 10-megawatt wind farms, which would cost more than $40 million to build. Electricity generated by the projects would be sold to NorthWestern Energy, for use in its power portfolio that supplies its 330,000 retail customers in Montana.

State and federal law requires NorthWestern to buy power from small, renewable-energy projects that meet certain criteria.

Since January 2008, NorthWestern made price offers that didn’t cover the cost of the project, Kenfield said, and wanted to charge him for the $14 million cost of building a new transmission line in the area. “My project didn’t create that need (for the line),” he said.

When NorthWestern wouldn’t negotiate, Kenfield said he had no choice but to take the case to the PSC and ask it to set a higher rate.

PSC staffers said Wednesday that the five-member commission will decide the issue by late June.

At the hearing Wednesday, Frank Bennett, a NorthWestern energy supply official, said the company had offered Kenfield the “avoided-cost” rate for small, renewable-power projects as set earlier by the PSC, and saw no reason to offer anything different.

The “avoided cost” is supposed to be what NorthWestern would pay elsewhere for similar power. The PSC is required to set a rate reflecting that cost, that NorthWestern must pay to renewable-power projects.

The PSC recently adjusted that rate upward, but small producers say it’s still not adequate, and have formally asked the commission to reconsider.

Mike Uda, an attorney representing Kenfield, pointed out Wednesday that NorthWestern recently signed a contract to buy power from a small hydro-electric project at above the avoided-cost rate.

Bennett said that contract was negotiated independently outside the parameters of the renewable-power rates, and that its amount — about $70 per megawatt hour — is now close to the current avoided-cost rate.

Wind-power projects attempting to get contracts are the ones refusing contracts with the avoided-cost rate, he said, and they should either accept the offer and realize that their project is “uneconomical.”

In an interview after the hearing, Kenfield said he’s not asking for any more than it would cost NorthWestern to develop the same type of power.

“They have it in their plan to buy 150 megawatts of renewable (power),” he said. “I’m sure they’re going to charge a price that’s equivalent, to make it work for them.”

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