Montana PSC approves NWE wind project

The Montana Public Service Commission recently approved NorthWestern Energy Corp.’s (NYSE: NWE) application for pre-approval to build and operate the 40-MW Spion Kop wind project near Geyser, Montana.

It cited cheaper power prices from wind than what the average power cost from all sources has been over the past decade. And it helps NorthWestern meet its renewable energy mandate in the next five years.

The Commission voted 3-2 to approve the application.

Montana law allows utilities to obtain pre-approval for significant generating projects they hope to build or acquire. The application for Spion Kop was not opposed by any party of record in the proceeding. The expected cost of electricity from the project is $55.42 per MWh, compared to an average cost of the current portfolio of $60.87 per MWh and a market price since 2000 of $64.37 per MWh.

“This project provides cheaper electricity than the price of power on the market for the last decade, and it’s cheaper than our forecast price of electricity going forward. It’s a long-term opportunity to provide power at a reasonable price,” said Travis Kavulla (R-Great Falls), chairman of the Commission, who represents Judith Basin County, where the wind farm will be constructed. “Even if the state had no renewable energy standard, this project would still be cost-competitive and I would still vote to approve it.”

Vice-Chair Gail Gutsche (D-Missoula) said, “With this approval, we are one step closer to meeting the renewable energy standard established by the legislature that 15% of NorthWestern’s portfolio come from clean and green energy.” With Spion Kop, NorthWestern is in compliance with the state’s renewable portfolio standard into 2017.

The Commission also voted 4-1 to put in place a performance standard ensuring that ratepayers are not at risk to pay for a shortfall in production if the asset significantly underperforms its energy-output expectations.

The Spion Kop project qualifies for a 2.2 cents per kWh production tax credit.