FERC Squelches MPSC Decision to Stop Guaranteeing Small-Scale Solar Rates

Montana’s Public Service Commission (PSC) was wrong to pull the plug on guaranteed rates for small solar projects (Docket No. EL16-117-000) in Big Sky Country earlier this year, the Federal Energy Regulatory Commission (FERC) ruled on December 15, according to a report by the Billings Gazette.

At issue was a PSC decision on June 17 decision to suspend the payment of the standard rate –$66 per megawatt-hour (mWh) – to solar energy developers in Montana with projects no larger than 3 megawatts (MW). The ruling approved the proposal of NorthWestern Energy, the state’s largest utility, to suspend the avoided-cost rate applicable to such small-scale solar facilities.

Following that decision, on September 19, Vote Solar and Montana Environmental Information Center filed a complaint against the PSC with FERC, alleging that the Montana commission had violated the Public Utilities Regulatory Policies Act of 1978 (PURPA) through its actions.

NorthWestern Energy claimed that the required rate should be eliminated because it believed its customers shouldered the burden of the customer-operators unfairly. The utility announced in May that hook-up applications for net metering from solar companies had unexpectedly surged. NorthWestern said it had received about 97 solar hookup requests since January 2015.

NorthWestern blamed the state-set rate – one the utility was required to offer to small solar projects. Ending the rate would have reduced the number of Montana solar projects hoping to sell electricity to NorthWestern to about ten, the local news outlet said.

However, green energy advocates said the ruling blindsided solar companies developing Montana projects under the PSC’s published terms, which hadn’t changed since 2012.

One solar developer, FLS Energy of North Carolina, filed a complaint with FERC on November 1, arguing that it had reached terms with NorthWestern before the PSC killed the rate. It didn’t have a contract. FLS accused NorthWestern of slow-walking an agreement, while the utility petitioned the state to kill the guaranteed price, according to the Billings Gazette.

FERC sided with the solar company and the environmental advocates, but stopped short of forcing the PSC to reverse its June decision and grant the rate to FLS.

“We do not intend to go to court to enforce PURPA on behalf of FLS; FLS thus may bring its own enforcement action against the Montana Commission in the appropriate district court,” FERC ruled.

Next month, the PSC will begin steps to formally review – and most likely to lower the rate it suspended in June.

An attorney for the PSC told the Gazette on December 15 that the FERC ruling was being reviewed and the commission had not yet decided how to respond.

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