(KPAX) In a victory for solar-power developers, the Montana Supreme Court Monday said state regulators acted illegally in 2017 when they drastically cut prices that utilities pay to solar-power plants in Montana.

The 5-2 decision upheld a lower court order that said the state Public Service Commission ignored federal and state law, when it reduced the prices and contract terms for solar-power projects planning to sell to NorthWestern Energy.

“NorthWestern’s frequently uttered trope that the requirements of (federal law) and thus approval of solar sources of energy will wildly increase the rates charged to customers finds little basis of support in the record,” wrote Chief Justice Mike McGrath for the majority.

The decision sends the case back to the five-member PSC, to set the rates according to the decision.

Environmental and renewable-power groups hailed the decision as a win for the potential development of solar-power plants in Montana.

“This decision benefits all Montanans by giving clean-energy resources a fair opportunity to compete with the dirty fossil fuels favored by NorthWestern,” said Jenny Harbine, an attorney for Earthjustice, which represented two of the plaintiffs.

The Montana Environmental Information Center, a plaintiff in the case, and others said since the PSC decided in 2017 to cut the prices paid to solar producers, no utility-scale solar project has been built in Montana.

The PSC decision in mid-2017 came after NorthWestern Energy, the state’s largest electric utility, asked the commission to suspend the current prices NorthWestern was required to pay smaller, independent solar-power producers.

Under federal and state laws meant to encourage green-energy production, these rates are supposed to reflect what NorthWestern would have to pay if it bought the energy elsewhere.

NorthWestern had complained that the current rates were above the current market, and, if it was required to continue to pay them, ratepayers would end up paying above-market prices for years. The company also said the rates had led to a “gold rush” by solar developers to file for those rates, to build in Montana.

The PSC complied, suspended the rates, set new ones that were much lower, and lowered the length of minimum contracts for the solar-power developers.

A coalition of solar-power groups and companies sued, saying the PSC had acted arbitrarily and illegally. In April 2019, District Judge James Manley of Polson ruled in their favor and required the PSC to set higher rates and longer contracts.

NorthWestern appealed the case to the Supreme Court, joined by the Montana Consumer Counsel, which agreed that NorthWestern’s 375,000 electric consumers could pay higher rates.

The high court majority said the law that requires setting of the rates is supposed to encourage solar-power development, and that the PSC didn’t properly consider the impacts of its changes or how they would undermine that goal.

In his dissent, Justice Jim Rice said the majority ignored the portion of federal and state law that says utility consumers must be held harmless, by the rates and contract terms for independent, green power.

“Locking NorthWestern into long-term, inflated (renewable-power) contracts will also lock ratepayers into long-term, inflated rates, in direct violation of what is the clear mandate of (the law) – ratepayer financial indifference,” he wrote.