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Wind-power developer's lawsuit claims price discrimination by state regulators, NW Energy

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A Montana wind-power developer is suing state utility regulators and the state’s largest electric company, saying they are acting illegally to set lower contract prices that will kill any new independent renewable-power projects in Montana.

Those actions come while NorthWestern Corp., the state’s dominant electric utility, is seeking to increase rates for power it owns, said the lawsuit filed last week by wind-developer Marty Wilde and his companies.

“The Montana Public Service Commission and NorthWestern have collaborated to adopt rates for NorthWestern that are triple those renewable resources receive for the same product,” the suit said. “NorthWestern and the commission have become intertwined in a symbiotic relationship, and they jointly act to deprive (independent developers) the opportunity to develop renewable resources in Montana.”

The lawsuit, filed in state District Court in Great Falls, asks the court to block what it calls “discriminatory” actions by NorthWestern and the state Public Service Commission and award his companies damages.

The Public Service Commission regulates NorthWestern and other electric utilities, and sets rates that NorthWestern must pay to certain independent power producers in Montana that sell their output to the utility.

PSC spokesman Chris Puyear acknowledged Monday that the commission has been setting lower rates and stricter contract terms for what NorthWestern pays the independent producers.

Yet he told MTN News that those rates reflect the regional market, which has an over-supply of electricity.

“In light of this environment of extremely over-supplied electricity prices, it simply might not be economical to build any project, whether it’s wind or solar or gas,” Puyear said.

He also said it’s misleading to compare the regulated price NorthWestern gets for its power to the price paid to independent producers.

The NorthWestern price – about $60 per megawatt hour – is based on the cost of past investments by the company in many projects it owns or buys from, while the recent prices set for the producers – anywhere from $17 to $35 per mwh – are based on the current market, he said.

NorthWestern spokesman Butch Larcombe also told MTN News that the company is not trying to undermine independent projects, but merely seeking the best price it can negotiate when buying that power.

The lawsuit is the latest salvo in a running battle between NorthWestern and the PSC and independent wind- and solar-power developers, who say the commission has taken a series of actions in recent months benefiting NorthWestern and harming the independents.

The 58-page complaint says the worst of the PSC’s actions occurred in the wake of the election of President Donald Trump, with commissioners using the election results as a rationale for making things more difficult for renewable-power producers.

Just before the November 2016 election, the PSC set a rate of $45 per mwh for an independent wind project, with a 25-year contract, the lawsuit said.

In the months after the election, the commission set a rate for another wind project at just under $38 per mwh – and later set a rate of just $17 per mwh for a solar-power project, with a 10-year contract.

“The commission’s justification for slashing (these) rates and contract lengths is completely devoid of reasoned decision-making, self-referential and without basis in fact or law, a tautology of `it’s because we said it’s so,’” the lawsuit said.

The suit said the PSC’s actions violate federal and state laws that require regulators to set prices and contract rules that encourage development of independent, renewable-power projects.

It also said the PSC has essentially aided NorthWestern’s efforts to squelch or discourage these independent projects, and favored the company’s own development or ownership of power production.

“By not purchasing power from independent power producers, NorthWestern has the ability to include in its rate base (power)-generation assets at inflated values, earning a profit on generation that could otherwise be provided by independent, small power producers,” the suit said.

“This economic disincentive has worked to (our) disadvantage over decades of wind-development projects in Montana, and actions (by the PSC and NorthWestern) complained of here make the plight of renewable energy far more difficult, if not impossible.”

About Mike Dennison

MTN Chief Political Reporter Mike Dennison joined MTN News in August 2015 after a 23-year career as a newspaper reporter covering Montana politics and state government. While some may believe that politics are boring, Mike firmly believes that's not the case if you tell the story with pizzazz and let people know why the story is important.
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