Montana wind developers seeks to use federal law in contract dispute over projects
Energize Weekly, August 29, 2018
A wind power developer has turned to Montana utility regulators and a federal law to resolve a payment dispute with NorthWestern Energy, the state’s largest utility, over four wind projects and a battery-storage facility it has proposed.
Caithness Beaver Creek LLC (CBC) is seeking to develop the four projects, near Big Timber, Mont., totaling 80 megawatts (MW), as well as a 40-MW battery facility.
Initially, CBC negotiating directly with NorthWestern had reached a tentative agreement, but in a filing to the Montana Public Service Commission, the developer said the utility changed its formula for capacity payments—the payment a facility gets for assuring grid-generation resources—reducing the first-year payment to $9.4 million from $19.8 million.
“This drastic change of position clearly demonstrates that NorthWestern is not negotiating in good faith with CBC,” the filing said.
CBC is seeking a ruling that the projects should be reimbursed under the federal Public Utility Regulatory Policies Act (PURPA). The law requires utilities to take renewable energy from local qualifying facilities. All four of the Beaver Creek wind facilities have been certified as qualifying facilities under PURPA.
The commission said it will review the contract and make a ruling on the projects by Feb. 6, 2019. CBC said the projects could come on online in 2020.
CBC wants a $31.33 megawatt-hour payment for peak-load hours and $29.5 a megawatt-hour for off-peak period. It wants a capacity payment of $81.45 megawatt-hours for peak times and 58 cents a megawatt-hour for ancillary services.
Key to the dispute is whether the capacity is seen as an intermittent generating resource or a more dependable, dispatchable resource.
“The projects should not be compensated as traditional wind only projects because the primary benefit of the projects is their ability to be used as capacity resources on NorthWestern’s capacity deficient system,” CBC said in its filing.
CBC argues that NorthWestern should pay for what the projects can deliver and added that the developer is ready to provide a letter of credit to cover underperformance so that ratepayers are held harmless.
“The battery storage systems will time shift the wind output and provide much needed capacity during NorthWestern’s peak periods,” the CBC said in its filing. “Each project will be capable of providing scheduled and dispatchable electricity in forward looking time blocks.”