Montana PSC approves NorthWestern Energy purchase agreement for electricity from proposed New Colony Wind project

The Montana Public Service Commission (PSC) approved Tuesday a 15-year power purchase agreement under which Northwestern Energy agreed to purchase electricity from the proposed New Colony Wind facility in Martinsdale, Montana.

The 23-megawatt (MW), which is projected to have an average annual output of 76,181 megawatt hours (MWh), is expected to come online at the end of 2018.

The PSC set a price of $23.30 per MWh for electricity generated by the wind farm, an increase from the price of $13.96 requested by NorthWestern. The commission also reduced the contract from 25 to 15 years and removed a carbon price adder from the rates.

Under the approved agreement, NorthWestern will be responsible for the full cost of interconnection and transmission-related upgrades to its system, and New Colony will pay for interconnection costs between its wind farm and the grid. Developers will also provide an additional $2 million security deposit for upgrades to NorthWestern’s transmission line between Two Dot and Martinsdale.

Commissioner Roger Koopman said that NorthWestern did not provide sufficient cost data to the commission.

“Generally the Commission works to assign financial responsibility for costs according to the demands each party imposes directly on the utility system,” Koopman said. “I’m disappointed that NorthWestern’s failure to produce complete estimates of interconnection and transmission upgrade costs prevented the Commission from doing that in this case.”

The PSC adopted NorthWestern’s cost estimates, but the commissioners indicated that they plan to review whether ratepayers or the utility should be responsible for substantial deviations between the estimates and actual future costs.

The commission also noted that NorthWestern has not yet completed its study of regulation requirements.

Under the Public Utilities Regulatory Policy Act (PURPA), utilities like NorthWestern Energy must purchase power from certain small renewable energy projects at the price it would cost the utility to deliver that power through its own generation or market purchases.