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The Missoulian
July 5, 2013

PSC may pull rug out from under small energy producers

My family has been ranching near Springdale for five generations now. It’s never been easy. Like most Montana ranchers, I have a tough time making a living off the land.

I have one untapped resource that could meaningfully improve the economics of my ranch. It’s the incessant wind. I could harness the wind’s power with turbines and sell the generated electricity.

I’ve spent nearly 10 years working to develop a small wind-power facility on my land. The technology has advanced and the economics are promising. This is an achievable goal that will help support my ranch, add to the local economy and help supply fellow Montanans with economical power.

I’m not a major energy developer. Landowners like me don’t have much clout when it comes to competing in power-supply markets. But I do have an opportunity to compete, thanks to a longstanding federal law enacted to add diversity to energy supplies dominated by large corporations.

Under this law, if I generate electricity from a small wind farm, the regulated utility that serves my area – NorthWestern Energy – must buy it from me for the same price it would pay to develop the resource on its own. The law allows state utility regulators – our Public Service Commission – to set these so-called “avoided costs” through a competitive process.

At least, that’s the way things work at the moment. But Montana’s PSC is on the brink of pulling the rug out from under small-scale energy development in our state.

In addition to allowing state regulators to set rates for small energy projects, the federal law also gives the PSC discretion to decide what types of small energy-producing facilities qualify for these energy sales to utilities.

The PSC has for many years set the bar at a reasonable 10 megawatts or less. That is, to qualify for the privilege of selling power to NorthWestern at the rate set by the PSC, a small energy project must produce 10 megawatts of power or less.

Now PSC Chariman Bill Gallagher wants to change the rules – limiting qualifying facilities to those that produce no more than 100 kilowatts. That’s 100 times lower than the current standard.

Even with small energy projects, economy of scale matters. Limited to 100 kilowatts, virtually no energy project is economically viable. It would cost more to build than it would return.


Click here to continue reading this op-ed on The Missoulian's website:

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