Montana Supreme Court orders PSC to set rates for proposed wind energy project

Mont. PSC ordered to set rates for wind project

HELENA, Mont. — The Montana Supreme Court has ordered the Public Service Commission to set rates at which a proposed wind-power project near Whitehall could sell its electricity to NorthWestern Energy.

The 5-0 ruling, issued late Tuesday, said the PSC ignored its own rules by not setting a reasonable price based on current data.

“The District Court properly determined, based on the whole record, that the PSC’s calculation of the … rate for the sale between Whitehall and NorthWestern was clearly erroneous,” Justice Brian Morris wrote for the court.

Whitehall Wind proposed building a 50-megawatt wind farm in the early 2000s and sought to sell power to NorthWestern under a federal law that says utilities must buy power from small, independent generators of “renewable” energy.

The law says if the utility and power project developer can’t agree to a contract, the PSC must set the rates, which Whitehall petitioned the PSC to do in August 2002.

After a hearing, the PSC set a rate of $10.639 per megawatt hour. Whitehall appealed, saying the PSC set an unreasonably low rate based on information NorthWestern submitted to the regulating agency in 1996.

Whitehall argued a reasonable 2002 rate would have been between $31 and $40 per megawatt hour and the PSC’s staff economist said $31 to $32 would have been reasonable. Whitehall asked the District Court to remand the case back to the PSC with instructions to set a new rate based on current data, and District Judge Loren Tucker issued such a ruling in 2008.

The PSC and NorthWestern appealed.

An official with Gamesa Energy, the Spanish firm that wants to develop the Whitehall Wind project, said she hopes the ruling will compel the PSC to promptly set a rate at which the project can sell its electricity.

“To build a wind farm, you need to know who you’re going to sell it to and for how much,” said Wanda Davies, head of development for Gamesa of Minneapolis. “It’s a critical piece in putting together a wind farm.”

An attorney for the PSC said Wednesday it may first address other issues in the complex case before setting a rate.

NorthWestern Energy spokeswoman Claudia Rapkoch noted that a rate of $50 per MWh was set in 2007, but renewable energy projects have argued that rate does not reflect current market conditions.

In recent months, NorthWestern customers have been paying $55 to $60 per MWh for electricity. Power sold by small, independent producers would become part of the mix of electricity NorthWestern sells.

“We will now be working with the commission to figure out what type of information is necessary to meet the needs based on this particular decision,” Rapkoch said Wednesday.