Montana District Court Denies Lower Payback to Customer-Generators

Montana District Court Judge Mike Menahan has affirmed (Cause No. ADV-2015-459) a 2015 Public Service Commission (PSC) order denying NorthWestern Energy’s request to decrease the amount paid to small wind and solar projects for their excess electricity fed back into the grid.

In a ruling issued March 3, Judge Menahan upheld the PSC’s decision to maintain existing “standard rates” for certain wind and solar projects no larger than 3 megawatts (MW) in size.

The Public Utility Regulatory Policy Act (PURPA), passed by Congress in 1978, requires NorthWestern Energy to purchase power from these “qualifying facilities” based on the “avoided cost” to the utility. In May 2015, the PSC found that NorthWestern Energy had failed to provide sufficient information to support its application to decrease the rates paid to small wind and solar projects.

NorthWestern disagreed with the PSC’s ruling and filed a complaint in district court last June. In his ruling, Judge Menahan stated that the PSC acted reasonably, in part because NorthWestern “calculated proposed rates using a flawed methodology.”

The justice also noted that “As petitioner, NWE bears the burden of producing sufficient evidence to support its claim. The PSC can only determine NWE’s avoided costs by using current least-cost resource data. NWE failed to provide this information in its application. Without it, the PSC could not approve the NWE’s requests for an interim rate adjustment.”

Speaking to the court’s decision, PSC Chairman Brad Johnson, commented, “I am very pleased with the court’s decision as it recognizes that the PSC’s order was based on our unique knowledge and expertise of the subject at hand, as well as a thorough and fair analysis of NorthWestern’s proposal.”

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