The Montana Public Service Commission voted 4-1 Jan. 29 to oppose a Montana Senate bill that would allow a renewable energy cooperative to move forward with plans to create two wind power generation sites, the PSC chairman told the Senate Natural Resources and Energy Committee.

In a note of explanation, the author of SB337, Russ Doty, wrote, “This legislation is needed to allow the Green Electricity Buying Co-op (GEBCO) to own the windmills that it has received authorization to finance with zero interest Clean Renewable Energy Bonds (CREBs). Without this legislation the $31.7 million in CREBs authorizations will be forfeited and likely reassigned to other states.” Mr. Doty is the executive director of the Billings-based co-op.

The co-op plans to use the bonds to build two 20-megawatt wind farms in Montana. One site would be south of Fort Peck on the Towe Farm in McCone County. The other facility would sit near Molt Road in Yellowstone County, a press release said.

Under Montana law, residential and small commercial customers of investor-owned utilities may form cooperatives that supply or promote green energy and conservation programs. “GEBCO was formed in the spring of 2006 to fulfill this mandate from the Montana Legislature,” the co-op’s website said.

Only PSC member Ken Toole, a Democrat from Helena, voted against opposing the bill. PSC members speaking before the committee argued that the co-op’s operation would be a burden on Montana’s energy ratepayers.

“The balkanization of the default supplier is the main problem,” PSC Chairman Greg Jergeson said. That default supplier is NorthWestern Energy, and the chairman was describing what happens to the pocketbooks of NWE’s ratepayers when customers leave the utility and then return.

NWE has to plan, he said. The company has signed contracts to get a certain amount of power.

When customers leave, the utility still has those contracts. Those who leave frequently return. Quite often, while those customers are gone, the price of power goes up. The returning customers, not wanting to pay more, ask that all of the utility’s customers absorb the increased cost.

The commission’s vice chairman, Doug Mood of Missoula, also stressed that NWE had to plan years ahead to meet its customers’ demands. Part of that planning involves obtaining contracts for a “regulated reserve” that is available to meet unexpected power demands.

Traditionally that reserve has been set at 30 megawatts, but the introduction of a major wind power facility into its system has pushed NWE to increase its reserve.

Reserve power is typically more expensive than power obtained from long term, or “base load” contracts.

The Judith Gap project has required more “firming” power than was first expected. Firming power is energy obtained from another source to compensate for the variability inherent in wind power generation.

The variation at Judith Gap was predicted to be at 20 or 40 Mw, but the reality has been more like 100 Mw, Mr. Mood told the committee. Since those fluctuations occur rapidly, the utility has to dip into its reserve to compensate.

“As a consequence of Judith Gap, they’ve had to go out and buy another 25 Mw. If you take and add another wind farm, it’s going to be extremely expensive to fund more regulated reserve, if it is possible at all,” the commissioner said during a phone interview.

He noted that NWE is unique among utilities because it doesn’t own any of its own generation. “It has to purchase its reserves.”

PSC Commissioner Brad Molnar, R-Laurel, said uncertainty over firming power could endanger existing wind projects.

“We may have to shut the windmills down,” he said.

The bill’s sponsor remains undeterred by the PSC’s opposition.

Sen. Dave Wanzenried, D-Missoula, said the bill wasn’t expected go up for a committee vote before Friday, Feb. 16, or possibly the following Monday. He said he hoped that amendments to the bill would address most of the PSC’s concerns.

He added that the actions of the PSC had not diminished his support of SB337.

“There is nothing I’ve heard that deters me in the slightest,” he said.

He noted that $32 million in bonding authority is at stake and that the wind project could give a badly needed economic boost to Eastern Montana. He said that wind, like coal, is among Montana’s valuable resources.

“I think we need to leave every single option open,” he said.

He said that the 2007 Legislature has placed a high priority on retaining customers in the base of NorthWestern Energy. That priority, he said, goes against the principle of deregulation that legislators have argued for in recent sessions.

Montanans always say that they believe in letting the free market work, he said, except perhaps in the 2007 Legislature.

Mr. Doty declined to comment on the PSC vote, noting that he was unhappy with the Outpost’s previous coverage of his project. He did add, however, that “We’ll deal with the PSC in the Legislature.”