Small wind power producers in Montana said Thursday that NorthWestern Energy wants to overcharge them for adding their power to the system that serves NorthWestern electricity customers.

Small power project developers said that if the state Public Service Commission doesn't force NorthWestern to come up with a more realistic charge, wind power producers likely will take their business to other states.

"I'm not going to be around, because the free market is going to tell me to go to Idaho," said Russ Doty of Billings, chief executive officer of New World WindPower.

Doty spoke at a PSC hearing Thursday in Helena, where Two Dot Wind of Billings is asking the commission to reject NorthWestern's proposed cost of "integrating" power from Two Dot's wind turbines near Martinsdale and Livingston.

The five-member commission, which regulates utilities, will decide the issue later this spring.

NorthWestern already is buying the power from Two Dot Wind and including it as part of the electricity that NorthWestern sells to its 320,000 electricity customers. The projects can produce up to about 4 megawatts of power, a small portion of the total power on NorthWestern's system.

But the utility says it must buy additional "regulating reserve" power to replace the wind power when the wind isn't blowing, and that Two Dot Wind should pay the cost of that reserve power.

These projects "cannot just shift their costs onto the consumer, regardless of their size," argued NorthWestern attorney Richard Garling.

"This case is about how Two Dot Wind should pay for wind integration, not whether it should."

Two Dot Wind argued that the real cost of placing its power on the system is next to nothing, in part because NorthWestern already has to buy reserve power for other uses and other projects.

Two Dot Wind "does not believe it should pay costs that there is no evidence that it caused," said Mike Uda, a Helena attorney representing the company.

Bill Pascoe, a consultant for other small wind projects, said NorthWestern wants to charge integration costs based on its experience with the large Judith Gap wind project, which can produce up to 135 megawatts of power.

Adding several smaller projects at different locations should actually lower the cost of integrating wind power onto the system, he said.

"We think using Judith Gap as the standard for setting wind-integration costs for small projects is entirely inappropriate," Pascoe said.

Pascoe said the commission should require NorthWestern, with input from smaller wind-power producers, to conduct a study of the actual cost of integrating the smaller projects. Until that study occurs, the charge for adding the projects should be nothing, he said.

Doty said regulators in other states have set lower integration charges for small wind power or other renewable-energy projects, and suggested Montana examine what they have done.

If the Montana PSC allows NorthWestern to charge an unrealistically high amount, developers will take their business to other neighboring states, depriving rural Montana of the benefits of wind power development, he said.

The Montana Consumer Counsel, a state office representing consumers in cases before the PSC, has testified that small wind power projects should be charged for their integration costs.

It suggested that NorthWestern calculate the cost of integrating all current wind power on its system, including Judith Gap, and allocate that cost, according to the size of the project.