Update: Inverted Block Rates in Montana

The Montana PSC denied all Motions in the case, yesterday Dec. 28th, 2010.  This means, for better or worse, the Montana PSC original order implementing decoupling will stand, until the whole concept is outlawed by the Montana Legislature.

FERC denies Grasslands proposal for their Wind Spirit Project

Grasslands Renewable Energy is trying to build the Wind Spirit Project in eastern Montana that would collect 3000 MW of renewable energy.  A first step, was getting the FERC to approve their funding methodology which would have certain subsidiaries of Grassland's parent company, a Spanish industrial conglomerate, owning wind projects along the collector system.  The project is certainly innovate, but the FERC issued an Order recently denying their proposal would "improperly grant an undue preference to certain transmission customers, and as such is inconsistent with section 205 of the Federal Power Act (FPA) and the Commission's open access principle".

There is a temptation to draw parallels to other Transmission projects in the state, but I don't know what the lesson is, other than developing transmission is difficult and the FERC is not just rubber stamping stuff.

Credit where Credit is due

This blog has made a point of targeting one soon to be member of the Montana Public Service Commission, Travis Kaulla, for accuracy.  I believe that this was a factor largely of Travis being one of the few Commissioners willing to actually put ideas on energy policy out into the public sphere, and also the fact that he was working full time and trying to run a campaign (which made it easier to miss details...).

In that context, I did want to commend Travis on his recent blog post, of which I believe to be both an accurate portrayal of the MATL situation and a very apt summary of the political, legal, and economic realities of the project.

Keep it up!

Inverted Block Rates and Decoupling Dead in Montana?

On December 20th, the Montana Consumer Council, Human Resources Council District XI/Natural Resource Defense Counsel (HR/NRDC) and NorthWestern Energy filed a joint motion asking the MT PSC to reverse the Commission's previous decision to implement inverted block rates and decoupling.

The parties agreement on this outcome can be interpreted in only one way: The MT PSC really messed up.

The fact that both supporters of the new rate design (NWE and HR/NRDC) and opponents (MCC) have decided that the MT PSC's final rule on the matter is so flawed that it is better to just junk it, demonstrates how fundamentally flawed the final order is.

The parties highlight a number of specific problems in their individual motions that include the MT PSC's lowering of NWE's rate of return for certain energy efficiency investments, not including natural gas, and the use of weather normalization.

It is truly disappointing that the MT PSC was not able to work with the parties, including the MCC which did not oppose the new rate designs on principal, to get a pilot proposal in place that would work.

It is after all, not a novel idea.  All three regulated electrical utilities in Idaho have similar rate structures, the Montana Power Company used to use these rates, and across the United States they are known to produce increased energy efficiency investment.

I understand that the Motions will be considered by the new Montana PSC in January.  One outcome, which would be very unfortunate, is to not honor the joint request of the parties and leave the fundamentally flawed order in place.  This would result in a failed program, that would set-back efforts to implement these common sense rate structures for years.

Though i note that one Montana Legislator has requested a bill draft that would "Limiting a public utility's ability to implement inverted block rates".  Thank freshman Jason Priest for his help in making it harder, if not impossible, to apply basic cause causation principals to our electrical rates.