Dive Brief:

• FLS Energy has asked Montana’s Public Service Commission (PSC) to rehear an issue they voted on in June that suspends avoided cost rates for solar power, according to Montana Public Radio.

• The suspended rates were set by the PSC under the Public Utility Regulatory Policies Act (PURPA) and called for payments of $66/MWh, which are passed through to ratepayers.

• Local press reports say more than 100 solar projects of 3 MW or less have been proposed in Montana, spurred by the high rates that were available before the suspension.

Dive Insight:

Passed in 1978, PURPA requires utilities to purchase power from certain qualifying facilities — typically small renewables — at rates comparable to their avoided cost for other generation. 

State regulators typically determine that avoided cost rate in consultation with utilities, and solar developers have been taking advantage the incentives in states like Montana, stretching interconnection queues and prompting utilities to petition for reforms. 

This spring, GTM Research estimated there was 2.9 GW of PURPA projects in development — 16% of the utility PV pipeline — and forecasted 1.8 GW of that pipeline will come online in 2016.

The challenges to PURPA rates are most frequent in Western states that lack organized competitive markets such as Montana and Utah, though Warren Buffett's Berkshire Hathaway Energy, which owns utilities throughout the West, has pushed for PURPA reforms at the federal level as well. 

Montana’s suspension of PURPA rates has upended plans of developers such as FLS Energy of Asheville, North Carolina, which now is asking for a rehearing of the PSC decision.

"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," Steve Levitas, a vice president at FLS, told Montana Public Radio. Levitas said the company has invested over $700,000 in their Montana projects.

More specifically FLS is protesting a two-part test set by the PSC. Developers that pass the test can keep working under the old rate of $66/MWh. The PSC plans to issue a new, lower rate this winter.

Levitas said FLS met 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," Levitas told Montana Public Radio.

There had to be a hard cutoff point, PSC spokesperson Eric Sell told Montana Public Radio. “If the commission hadn’t acted there would be risk to ratepayers.”

Levitas says FLS was far enough along in the process to work under the old solar price, and he intends to pursue all the remedies available under the law.