Montana PSC and NorthWestern Energy work together to create fair solar energy contracts

The Montana Public Service Commission (PSC) temporarily suspended the qualifying facility (QF) standard rate for new small solar projects last week after NorthWestern Energy found that customers could face $215 million in additional costs over the next 25 years.

The government requires state commissions to lock in rates for solar energy instead of using true market value. The current lock-in rate for solar energy is $66 per megawatt hour in Montana, a rate that NorthWestern Energy found to be artificially high.

NorthWestern Energy proposed an emergency request to the PSC on May 17 to suspend the current QF-1 standard to solar projects between 100 kilowatts and three megawatts. The commission approved the request by a vote of 3-2 after finding that customer rates were indeed inflated. In an effort to protect customers, the rate will be suspended for new contracts. Existing contracts will still be in effect at the agreed rate.

“The commission chose the best option available, which honors those solar projects to which NorthWestern is legally obligates, while strongly encouraging bilateral negotiations between solar developers and the utility to bring additional projects online at rates that protect the consumer,” Commissioner Roger Koopman (R-Bozeman) said. “This case underscores the futility of government tampering in the energy marketplace, requiring state commissions to lock in rates that are almost immediately out-of-date. Politicians think they know better than the market. This proves, once again, that they don’t.”

The suspension will be in effect for six months. NorthWestern Energy and the PSC will work together to negotiate new contracts.