PSC attorney: Yes, commissioners showed bias in solar power rate case, but that’s OK

As litigation over a proposed solar farm development heads to the Montana Supreme Court, attorneys for Montana’s utility regulation commission have offered a rebuttal to the solar developer’s claim that commissioners’ highly public skepticism about renewable energy amounts to a due-process violation.

Yes, some commissioners showed bias, the Public Service Commission says in an Oct. 3 court filing – but not so much bias that a lower court judge was justified in overruling how the commission set rates for the solar project.

“Without question, the commissioners’ remarks exhibited bias,” wrote PSC attorney Zachary Rogala, referring to newspaper guest opinion columns, written by several commissioners, that either criticized renewable power developers or expressed skepticism about climate change science. “Rather the question is whether the commissioners were impermissibly biased contrary to law.”

The litigation concerns the 80-megawatt MTSUN solar development proposed near Billings, which hopes to sell power to NorthWestern Energy, the utility company that serves most of Montana.

Solar projects like MTSUN are guaranteed the right to sell power onto the grid by a 1970s-era federal law, but the Public Service Commission has authority to referee disputes over contract terms and rates, which are supposed to align with how much it would cost utilities to generate or buy power from other sources.

Solar advocates have argued that Montana’s elected Public Service commissioners, all Republicans, have created a hostile environment for solar development by setting rates too low for solar farms to be economically viable.

The PSC, along with NorthWestern and the Montana Consumer Counsel, have argued that the lower rates represent a fair price for MTSUN and other solar projects, and that granting solar developers their desired rates would unnecessarily burden consumers with higher electricity costs.

In June, District Court Judge James Manley of Polson sided with MTSUN, ordering the PSC to give the project more favorable rates. Citing the newspaper columns and a 2017 “hot mic” comment, in which Commissioner Bob Lake appeared to admit the PSC was setting contract terms that discouraged solar development, Manley also found that commissioners had failed to adjudicate the case with adequate impartially.

“The commission violated MTSUN’s due process rights in this proceeding by making decisions based on bias and policy preferences and in conflict with the recorded evidence,” Manley wrote.

Three of Montana’s five utility commissioners – PSC Chair Brad Johnson and commissioners Roger Koopman and Tony O’Donnell – have written newspaper columns cited in the litigation.

In a January 2016 column published by multiple Montana papers, Koopman criticized renewable energy sources as less reliable than coal and natural gas plants, and called it an “unsettled question” whether CO2 emissions are “in net effect, a climatic calamity or an earth-greening benefit.”

In an August 2016 Billings Gazette oped, Johnson accused “corporate solar developers” of “throwing ratepayers under the bus to boost their own profits.”

The MTSUN case was appealed to the state Supreme Court by NorthWestern in June, setting up a new round of litigation. PSC attorneys take issue with several aspects of Manley’s ruling, arguing that the 25-year contract terms the judge mandates will result in a $47 million “overcharge” for Montana ratepayers, in part because the judge ordered commissioners to factor an anticipated federal tax on carbon into their cost calculations.

“Sensationalized commissioner comments notwithstanding, the commission’s decisions on MTSUN’s petition are reasonable and supported by substantial record evidence,” Rogala wrote in the PSC’s filing.

MTSUN attorney Michael Uda, of Helena, said in an interview that the judge was correct in determining the PSC had failed to treat his client fairly. The commissioners, he said, treated the case as a legislative matter by which they could bring their personal policy preferences to the table, rather than as a “quasi-judicial” matter in which they were bound to act as impartial judges.

“Everyone should stand equal at the bar of justice,” Uda said. “If the Public Service Commission is allowed to make decisions like this in the presence of what appears to be an obvious, palpable bias, then I don’t know what’s out of bounds.”

In defending the commission’s solar rate actions, PSC attorneys cited a 2000 case in which the town of Ennis was sued after denying a developer’s proposal to build a large RV park on the bank of the Madison River. The developer, Madison River R.V., argued that a town councilman, who had publicly questioned the project and then voted for the denial, should have recused himself.

In that case, the Montana Supreme Court wrote that the developer “cites the principle that one who makes decisions in a judicial or quasi-judicial capacity must be free from bias, prejudice or preconceived determination of the issues. It cites no authority, however, that this principle applies to elected members of a city council.”

The court continued: “In fact, this principle is the antithesis of our political process, in which candidates run for election based on espoused political platforms and on promises of what they will do — if elected — concerning various issues of public interest.”

As such, the PSC argues its commissioners should be considered impermissibly biased in the MTSUN case only if the court system determines they considered the issue with “an irrevocably closed mind.”

“Madison River R.V. acknowledges that elected officials like the Commissioners are not free from bias. It accepts that biases are reasonable in many circumstances but establishes a helpful standard,” Rogala wrote.

The PSC also argues it shouldn’t be forced to incorporate the effects of a potential federal carbon tax in its rate analysis, given that the Trump administration has rolled back Obama-era efforts to have the Environmental Protection Agency regulate carbon emissions. Under Manley’s order, the power rates paid to MTSUN would include a carbon factor based on the presumption that coal and gas energy production will become more expensive as it becomes subject to carbon regulations.

“[U]nder the Trump presidency, predicting the amount — or even existence — of a carbon tax is an academic exercise,” Rogala wrote.

A PSC spokesman declined to comment on the litigation, but Commissioner Koopman, who was re-elected after his 2016 column was published, addressed the bias issue during a July public meeting. He argued then that utility commissioners have a better handle than Manley does on what constitutes fair rates for a solar project.

“I come to the conclusion, on the record, that it’s much more likely that the judge came to his ruling on the basis of bias,” Koopman said. “I think it’s the example of when you point the finger, there’s three pointed back at you.”

Eric Dietrich is a journalist and data designer based in Helena. He is the lead reporter on the Long Streets Project and also covers state policy for MTFP. He has previously worked for the Great Falls Tribune, Bozeman Daily Chronicle and Solutions Journalism Network. Contact him at edietrich@mtfp.org or 406-544-1074.