PSC says ‘no’ to higher electric rates for homeowners with solar panels

NorthWestern Energy will not be allowed to charge homeowners with solar panels a higher rate for electrical service or to reduce the refund homeowners get for generating their own electricity.

Proponents of renewable energy celebrated Monday afternoon after the Montana Public Service Commission unanimously rejected NorthWestern Energy’s request to give less of a benefit to customers who have rooftop solar systems. 

Andrew Valainis, executive director of the Missoula-based Montana Renewable Energy Association, said he was thrilled with the ruling.

“Montanans value self-reliance and resilience, two important benefits of rooftop solar and other distributed generation systems,” Valainis said in a statement. “The ruling today preserves and protects those values.”

This was a large general rate case, the first in a decade for NorthWestern Energy, the state’s primary electric utility with 370,000 customers and thousands more in the Dakotas. 

NorthWestern Energy tried to get permission to add a demand charge of $40-$45 a month to the utility bills of those with new rooftop solar systems. Those with existing systems would not have the additional charge. The utility tried to justify the charge as a way to recoup fixed transmission and distribution costs.

The utility also tried to reduce the amount of monthly credit Montanans could receive for producing solar energy and adding it to the electrical grid, a process called “net-metering.”

If homeowners can generate enough solar energy to meet their own needs, the electrical portion of their bill is zeroed out. Then, under net-metering, they can sell a limited amount of extra energy back to NorthWestern Energy at the retail rate to get credit for the next month. 

NorthWestern has regularly opposed legislation that would allow customers to sell more electricity back or that would allow net-metering for larger arrays that produce more than home systems. 

The utility claimed that if some customers weren’t paying to help with the upkeep of the transmission system they still use, they receive a “subsidy” that non-solar customers can’t get, so non-solar customers would have to pay more. The claim made lawmakers think twice about voting to increase net-metering.

In 2017, House Bill 219 passed to study whether such a “cost shift” exists. The bill required the Public Service Commission to oversee the study, but it was up to NorthWestern Energy to provide the data, a situation that prompted mistrust among solar proponents.

Now, two years later, the study didn’t produce enough information to answer the question.

Commissioner Tony O’Donnell said the PSC didn’t have enough information to make a decision on net-metering, partly because not enough homes have solar units to be able to determine if their electricity credits really hurt the utility’s bottom line. Customers with rooftop solar systems account for less than 1% of NorthWestern’s customer base in Montana. 

O’Donnell made the motion to reject the proposal but said NorthWestern could revisit the issue when enough solar systems combine to reach 5% of the electric system’s “peak load.”

Earthjustice attorney David Bender said the PSC’s decision helped Montana’s energy future.

“Today, Montana joins other states in recognizing that customers have the right to produce and consume electricity they generate from the free sunlight that shines on their property every day – without discrimination from utilities,” Bender said. “While the utility is allowed to come back with the required analysis and try again, we’ll be waiting for them. We are confident that a correct analysis will confirm what we’ve been saying all along: solar customers are a net positive to our energy grid.”

NorthWestern Energy failed to get its requested increases on Monday, a small win for the solar industry. But at the end of October, the PSC granted the utility’s request to raise $6.5 million from customers.

That’s far less than the utility wanted originally. The $6.5 million was part of a settlement brought by several customer groups who had intervened in the NorthWestern Energy’s attempt to raise rates by almost $35 million.

Contact reporter Laura Lundquist at lundquist@missoulacurrent.com.