NorthWestern Energy supports net metering legislation in Montana

NorthWestern Energy, Montana’s largest electricity provider, is supporting legislation in the Montana state legislature that would revise the state’s net metering policies.

Montana lawmakers are currently debating several bills that could impact the bottom line for utilities and their customers. Sen. Pat Connell’s (R-Hamilton) Senate Bill 7, which states that net metering customers may not be subsidized by other public utility customers, was passed by the Senate and is being considered in the House.

“Our fundamental concern about the net metering policy going forward is reflected in this bill,” Butch Larcombe, spokesman at NorthWestern Energy, said in a recent interview with Daily Energy Insider. “It is our belief and the belief of a lot of utilities across the country that our non-net metering customers end up subsidizing our net metering customers under the current rules.”

Montana’s net metering policy allows customers that install a wind, solar, or hydropower system that generates up to 50 kilowatts of electricity to receive credit on their energy bill for any extra energy produced that goes onto the electric grid.

Net-metering customers receive credits equal to the retail electricity rate as opposed to being compensated based on the wholesale rate, similar to other electricity providers.

Many state legislatures are grappling with the costs and benefits of net metering. Some utilities argue that rooftop solar customers avoid paying for certain fixed costs of the grid, thereby shifting those costs onto customers without distributed generation systems.

NorthWestern has about 363,000 electric customers, including about 1,800 net metering customers. The company provides electric service to the majority of Montana and part of South Dakota.

“If net metering expands and rooftop solar continues to expand across the country, it could be a big issue so we’re working now to get the policy right and have it be fair for all the customers and not favor a smaller group over a larger group,” Larcombe said.

A similar bill introduced by Sen. Keith Regier (R-Kalispell), Senate Bill 78, also would revise net metering laws. That bill would require the Montana Public Service Commission to establish a separate rate class for net metering customers before Jan. 1, 2018. Electricity produced by net metering customers would be valued at the wholesale rate, and customers would pay a monthly service charge to cover their share of a public utility’s fixed costs of operation.

Last year a Montana legislative committee released the results of a study on the impact of net metering. Although the study was designed to provide guidance before moving forward with changes to the state’s net metering program, a consensus was not reached on how to analyze costs and benefits to ensure all utility customers are treated equitably in the future.

Meanwhile, NorthWestern Energy is focused on filling its need for cost-effective electric generation capacity. The company plans to soon seek proposals for the generation of up to 150 megawatts of electricity.

“We have lot of wind generation on our system, but it tends to have dramatic ups and downs and is fairly unpredictable,” Larcombe said. “We need something that is more reliable to help deal with these ups and downs and to give us more capacity to address the peak needs of our system.”

Nearly 60 percent of the electricity NorthWestern supplies to Montana customers comes from water or wind.

Since acquiring Montana’s hydroelectric system late in 2014, NorthWestern has focused on adding capacity to meet customer needs during periods of peak energy demand. The 11 hydroelectric dams provide more than 400 megawatts of generating capacity, which is almost 40 percent of the company’s average daily needs, Larcombe said.

NorthWestern also is pursuing several solar energy pilot projects. The company has partnered with Montana State University and the city of Bozeman on a project to evaluate the potential of solar power to meet the community’s energy needs. Another project involves using solar panels and batteries to test the potential of using micro-grids to improve electric reliability in rural areas.