Montana Public Service Commission creates barriers to solar energy
In a recent IR guest editorial, Montana Public Service Commission Chairman Brad Johnson touted the Commission’s recent decisions that affect Montana electricity customers and made questionable claims about progress toward securing “Montana’s clean energy future.” But by any credible measure, the Commission’s irresponsible decision last month to kill small-scale commercial solar energy development in Montana was a leap backward and will hurt both consumers and future business development in Montana.
On June 22, the Commission voted to slash by 40 percent the amount that our largest utility, NorthWestern Energy, must pay to small-scale, commercial solar power developers. These solar developers put electricity onto the grid so NorthWestern can sell it to us. As Commissioner Bob Lake unknowingly admitted on a live microphone, “Just dropping the rate that much probably took care of the whole thing.” But in case the low payments don’t “take care of” Montana solar development – in a Godfather kind of way – the Commission effectively guaranteed that outcome by reducing the maximum contract length for solar projects from 25 years to just five years. In doing so, the Commission eliminated the kind of market certainty that solar developers need to make sound business decisions, which makes securing financing for such projects in Montana all but impossible.
Consider how the PSC has treated other NorthWestern Energy production sources recently in pricing and contract length: the price for power from various coal sources has ranged from about $64 to $67 per megawatt hour, over terms of 30 years or more, from hydro at almost $60/MWh and 30 years, and from the Judith Gap wind farm at about $32/MWh and 20 years. And yet, the PSC just set the rate for solar projects at $20/MWh for 5 years.
This decision of the PSC – a regulatory, not policy-making body – is a clear attempt to discourage solar development, and it goes against long-established federal law. Since the PSC is a quasi-judicial body, this can best be described as “legislating from the bench.” The Public Utilities Regulatory Policies Act is a 39-year-old law that requires states to encourage the development of renewable power when it is cost-competitive with traditional energy resources. The PSC’s decision does the opposite.
The Commission has tried to defend its decision, but in fact, it is a horrible outcome for consumers. Montanans overwhelmingly want clean energy – and not just because it’s far better for our health, water, air and climate. It’s also good for our wallets. Solar energy has never been cheaper. When solar is fairly valued based on real market economics, it is cost-competitive with other, dirty forms of energy. And because it is independent of volatile natural gas and coal markets, solar’s affordability is reliable into the future.