Lawsuit: Montana solar industry claims PSC order is “death knell” for growth of renewables

The state's solar community this week filed a lawsuit in District Court, challenging a recent order by the Public Service Commission that they believe will kill Montana's renewable energy future.

The lawsuit, led by the Montana Environmental Information Center, Cypress Creek Renewables and Vote Solar, contends the PSC's decision will undercut their ability to compete with monopoly energy companies.

The suit was filed on Wednesday in Great Falls District Court and names the PSC and NorthWestern Energy as defendants.

“The commission's decision is a death knell for small solar development in Montana at a time when demand for renewable energy is growing, the cost of producing renewable energy is at an all-time low, and NorthWestern has claimed a significant need for electric capacity that solar and wind developers are well-positioned to supply,” the suit contends.

Among the complaints, the lawsuit claims the PSC unreasonably shortened the duration of solar energy contracts from 25 to 15 years. When coupled with rate decreases approved by the commission, the one-two punch could kill future renewable energy projects in the state.

“Independent power producers simply want a fair chance to compete as afforded under the law, but monopoly utilities such as NorthWestern Energy are doing everything they can do to restrict that competition,” said Casey May, director of market development for Cypress Creek Renewables.

The company, based in Delaware, stands among Montana's leading solar energy developers and has actively pursued smaller projects in the state for several years.

But the company now says the reduced contract lengths approved by the PSC, coupled with the rate decreases, will hurt its ability to finance and develop small solar energy projects in Montana.

Without judicial relief, the company said, it won't be able to construct any new projects in the state.

“We want to do business in Montana,” said May. “We want to increase Montanans’ access to clean energy, create jobs and increase the tax base of state and local governments. But this decision prevents that. The commission gave NorthWestern even more than what it asked for.”

Both federal and state law requires the PSC to set rates and contract lengths for independent energy projects with a generating capacity of three megawatts or less.

In doing so, the PSC reduced the standard rates for small solar projects from $66 a megawatt hour to $31 a megawatt hour. It also reduced the length of a contract for selling renewable energy to NorthWestern Energy from 25 to 15 years.

The plaintiffs believe Montana will lose hundreds of millions of dollars in economic investment as a result of the PSC's actions, along with hundreds of construction jobs, clean electricity and tax revenue for local government.

“Montana just held a special legislative session where programs were cut left and right because of a lack of tax revenue,” said Brian Fadie, the clean energy program director with MEIC. “Meanwhile, the solar industry is practically knocking down the state’s door trying to create new jobs and revenue while also cleaning up our electric grid. Solar can be a win-win for Montana, but not if the Commission’s order is allowed to stand.”

The PSC said it initially set out to shorten the contracts to 10 years, but reconsidered its decision and set them at 15 years, calling it an extension. It claims that shorter contracts protect ratepayers by ensuring the rates reflect the actual cost of generating electricity.

The commission said the 15-year contract was supported by expert witnesses sponsored by both Cypress Creek Renewable and Vote Solar. The PSC, which is comprised entirely of Republicans, said it was committed to “creating a level playing field” that allows monopoly power companies and independent utilities the ability to compete for the same customers.

Adam Browning, executive director of Vote Solar, said independent producers are simply looking for equal opportunity, something the plaintiffs believe the PSC failed to provide.

“Now that solar is cost-competitive, fossil fuel interests in Montana and across the country are attempting to change the rules of the game,” said Browning. “Fair treatment for solar opportunity will benefit Montana's families, economy, and environment.”

The challenge was filed in state district court in Cascade County, where Cypress Creek has proposed four solar energy projects that are now on hold. The parties are represented by Earthjustice and the Uda Law Firm.