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Batteries Alone Won't Qualify For Small, Locally Owned Renewable Energy Requirements

Tall wind turbines form a grid over prairie grass, with mountains in the background.
Kayla Desroches
Yellowstone Public Radio
Turbines at Judith Gap Wind Farm on Aug. 15, 2020.

NorthWestern Energy says this year it received several applications from developers hoping to build storage only batteries under a state law that encourages development of small, community owned renewables.

NorthWestern attorney Clark Hensley says the utility was unclear whether the batteries qualified as a Community Renewable Energy Project (CREP). Northwestern is required to purchase electricity from CREP facilities like small solar or wind farms owned by a Montana resident, entity or public utility and must produce fewer than 25 megawatts of power.

“If a battery only resource doesn’t qualify, that doesn’t help us in satisfying our statutory obligations and number two, it wouldn’t be fair to the other bidders in the process if we were evaluating a resource that doesn’t qualify," Hensley said.

Regulators’ decision is the latest step of NorthWestern navigating an energy law that environmental lobbyist Anne Hedges says was designed to sprinkle renewable energy resources around Montana in small doses.

“The legislature when it adopted the law really wanted to make sure that the benefits of the renewable energy standard were spread across the state and not just concentrated in some big wind farms in a couple locations," Hedges said.

Hedges, who’s also the deputy director of the Montana Environmental Information Center, says state regulators have let NorthWestern off the hook time and time again by granting the utility exemptions.

“There is no debate about what the law requires of the PSC and NorthWestern. They just didn’t follow it," Hedges said.

NorthWestern says it’s trying to fulfill the requirement.

“It’s just a really challenging law to meet," Hedges said.

NorthWestern attorney Sarah Norcott says the utility is roughly 15 megawatts short of the mandated 65.4 megawatt requirement and has been slowly working towards it.

She says projects that submit proposals often don’t meet the law’s local ownership requirements and aren’t cost effective for customers under the Montana Public Service Commission’s cost cap calculations.

“Even though we can own the project and it qualify as a CREP, the cost cap becomes an issue," Norcott said.

To avoid fines for not hitting its requirement, NorthWestern applied for waivers from 2012 to 2016, saying it faced insurmountable barriers. The Montana Public Service Commission granted each waiver.

In 2018, the Montana Environmental Information Center sued.

“NorthWestern had requested so many waivers that it was getting to the point that it was clearly a hollow provision in law and we wanted to breathe life into it," Hedges said.

A district court agreed. It rejected regulators’ assessment that NorthWestern took all reasonable steps to procure small renewable resources and invalidated two years’ worth of waivers.

Montana Public Service Commission (PSC) staff estimates fines for those years could total $708,000 to $2.5 million.

The PSC and NorthWestern are appealing to the state Supreme Court, which this year ruled the PSC set rates too low for renewable energy facilities in two other cases.

A district court this year found the PSC also neglected energy law when coming to a decision on a wind farm with battery storage.

Tony O’Donnell has been a southeast Montana PSC commissioner since 2017 and says NorthWestern made a convincing argument for a waiver a few years back. He said it was a close call, but he voted in NorthWestern’s favor.

“It seemed to me at the time, and again my memory is really vague on this thing from two three years ago, that NorthWestern had done a lot of work on it," O'Donnell said.

The PSC unsuccessfully tried to repeal the CREPs requirement in 2017. The legislature has made some changes over the years, although Norcott with NorthWestern says she’s not sure it’s workable.

She also says waiver applications from 2017 up until today are stalled due to the appeal currently before the Supreme Court. Norcott expects a decision any day.