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PSC approves purchase agreement between NorthWestern, New Colony Wind

PSC approves purchase agreement between NorthWestern, New Colony Wind

Helena, Mont. – A proposed wind farm moved one step closer towards breaking ground today after receiving the go-ahead from state regulators. The Montana Public Service Commission voted unanimously to approve the sale of electricity from the facility to Northwestern Energy under the terms of a 15-year power purchase agreement.


New Colony Wind proposes to develop a 23 megawatt (MW) wind farm located near Martinsdale. The facility, which is expected to produce an average annual output of 76,181 megawatt hours (MWh), or enough electricity to power 6,900 homes, is expected to come online at the end of 2018.


Federal law called the Public Utilities Regulatory Policy Act (PURPA) requires utilities like NorthWestern Energy to purchase power from small renewable energy projects known as Qualifying Facilities (QFs) at the price it would otherwise cost the utility to deliver equivalent amounts of power to serve customers either through its own generation or market purchases.


New Colony entered into contract negotiations with NorthWestern in May 2017 when it tendered a Power Purchase Agreement with the utility at a 25-year, fixed price of $43.63 per MWh. NorthWestern disputed New Colony’s cost estimates, requiring mediation by the PSC.


The Commission set a price of $23.30 per MWh for electricity produced by the wind farm, up from $13.96 requested by NorthWestern. Consistent with its recent QF-1 and MTSUN decisions, the Commission also reduced the contract from 25 to 15 years, while eliminating a carbon price adder from the rates.


Meanwhile, the Commission grappled with whether NorthWestern or project developers should bear responsibility for $5.4 million in interconnection and transmission related upgrade costs associated with the project.


Commissioner Roger Koopman, R-Bozeman, expressed frustration at the lack of credible cost data made available to him by NorthWestern on the subject. “Generally the Commission works to assign financial responsibility for costs according to the demands each party imposes directly on the utility system,” he 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.”


Under the agreement approved by the Commission, NorthWestern will pay the full cost of interconnection and transmission related upgrades on its system, while New Colony will bear responsibility for interconnection costs between its wind farm and the interconnection with the grid. Developers will also be required to make an additional $2 million security deposit for upgrades to NorthWestern’s 100-KV transmission line between Two Dot and Martinsdale.


“The deposit prevents a situation in which NorthWestern incurs the expense to upgrade its transmission facilities only to have developers abandon the project in the early stages,” said Chairman Brad Johnson, R-East Helena.


On the subject of regulation costs associated with managing the projects intermittent generation, the Commission adopted NorthWestern’s cost estimates. However, commissioners signaled their intent to further review whether ratepayers or the utility should be responsible for substantial deviations between those estimates and actual future costs. NorthWestern has delayed a comprehensive study of regulation requirements despite the Commission’s repeated direction to do so.


To view the full docket, visit: http://bit.ly/2BBj1Ei

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