A North Carolina solar energy company says it’s prepared to sue Montana if state utility regulators stick by their decision on how much they can charge for electricity.
FLS Energy, Inc. has asked Montana’s Public Service Commission to re-hear an issue they voted on in June. That vote suspended the state’s current favorable rate for renewable energy companies. Many expect a new rate to be set much lower.
Steve Levitas, a vice president at FLS, says the company has invested over $700,000 in their Montana projects.
"Well, if the decision stands as issued, that will be the end of our development activities in Montana. None of our projects will go forward," Levitas said.
The PSC suspended the price for renewable power at the request of NorthWestern Energy. Utility companies like NorthWestern are legally required to pay power producers like FLS the state rate for the electricity they generate.
NorthWestern said current rates are out of date and if action wasn’t taken to correct them, it could mean they’d have to pass on hundred of millions of dollars in additional costs to their customers.
FLS’ Steve Levitas agrees that the current rate needs to change. But he says the way the PSC handled NorthWestern’s request to suspend the rates wasn’t fair to solar developers.
"We think that's the right question to ask; what is the legal, fair, reasonable, just way to make this decision. What the commission wound up doing was adopting a two-part test.”
The two-part test allows developers who are far enough along in their building process to keep working under the old rate. That rate is $66 per megawatt hour. The new rate, which will come out this winter, will likely be much lower.
FLS meets the requirement for one of the tests, but not the other.
"The problem we had is that the commission added a second element to the test, which is that the party also have a signed and executed interconnection agreement. We don’t understand where that requirement came from; it wasn't requested by NorthWestern, and it bears no rational relationship to the issues at hand."
FLS says NorthWestern failed to meet the deadlines that would have allowed their company to supply NorthWestern with solar electricity.
PSC spokesperson Eric Sell says the commission has to determinate a fair point to allow existing projects to move forward.
"But there does have to be a hard line cutoff. If the commission hadn’t acted there would be risk to ratepayers. So that was the main driver behind this, and we were just trying to find where that line would be to be fair to the solar developers at the same time."
Sell says the two-prong test created by the PSC are requirements for a legally enforceable agreement.
"Of course these solar developers are going to be upset. They saw an inflated rate, they targeted that rate, they came to the state of Montana because they wanted to build a bunch of small solar projects all broken up into small pieces so they can qualify for a higher rate and earn more money. Of course they are going to be upset with the State of Montana about that, but the commission’s actions were totally within the law, and I believe that FLS along with the other developers are going to continue to be angry that the commission caught onto their scheme and decided to suspend the rate and recalculate it so it is more accurate and doesn’t harm consumers."
The PSC will decide Thursday whether to accept FLS’s application for a re-hearing. Sell says if that is denied, he expects FLS to continue challenging the commission's decision.
Steve Levitas of FLS says his company will continue to argue that they were far enough along in the process to work under the old solar price.
"We intend to ask the commission to reconsider its decision. But if they decline to do so we really have no choice but to avail ourselves of legal remedies. We think the action is unlawful under both federal and state law, and we'll pursue all the remedies that are available to us. We’ve made a tremendous investment in the state and we can’t afford to walk away from that."
This is the latest development in an adjustment the PSC must make to how much utility companies like NorthWestern have to pay energy producers like FLS for solar electricity.
A federal law from the 1970s requires utilities to buy from alternative energy producers, but it allows individual states to set the prices utilities pay.
Montana’s PSC adjusts those rates every two years, and once companies have entered into an agreement, they can be locked into that price for several decades.