Dive Brief:

The Montana Public Service Commission last week voted to extend the length of contracts offered to renewable energy projects of up to 3 MW under the Public Utility Regulatory Policies Act (PURPA)

Those projects, known as Qualifying Facilities (QFs) under PURPA, are now eligible for 15-year, instead 10- year, contracts.

At the same meeting, the PSC also voted for symmetrical treatment of all resources by making the 15-year contract term applicable to all resources contracting with NorthWestern Energy, not just PURPA resources (Docket No. D2016.5.39).

Dive Insight:

In places where there are competitive wholesale power markets, utilities can opt out of PURPA. But in states where PURPA is still in full force, there has been a boom in renewable projects as developers are drawn by guaranteed, long term PURPA contracts. That has set the stage for PURPA battles in states such as Montana and Idaho where the prospect of long-term contracts draws developers as utilities resist what they feel are overly rich contracts.

In the June order, the Montana PSC reduced rates paid under PURPA by 40% and trimmed contract lengths from 25 years to five years, with an option to extend the contracts by another five years.

In its most recent action, the PSC extended the term for contracted energy, not just for PURPA resources. Rates available under the PSC’s modified order breaks payments to solar QFs into on-peak and off-peak rates. When demand is high NorthWestern must pay $37.26/MWh. When demand drops, the rate falls to $28.14/MWh.

“A 15-year contract provides sufficient protection for the ratepayer, while giving investors the certainty that they need to move forward with energy projects in Montana,” Commissioner Bob Lake said in a statement.