Cost of backing up wind key to NWE dispute 

The green energy industry enjoys an exciting public image, from futuristic hybrid engines to caffeinated, playful work environments. But the real work of the green revolution is just that: work.

Generating power with renewable resources creates a host of logistical and legal challenges, and it falls to several blandly named government bodies to shape the future of alternative energy. In Montana, that government body is called the Public Service Commission.

An important recent decision by the PSC concerns a small Billings-based wind-power provider, Two-Dot Wind, and Montana’s largest utility provider, NorthWestern Energy. Their legal conflict, and its resolution, should concern every energy-conscious Montanan.

According to a 1978 renewable energy law, NorthWesternern Energy must do business with Two-Dot Wind if it wants to do business in Montana. This law obliges electric utilities (such as NWE) to purchase renewable power from non-utility electric producers (such as TDW). The legislation was an early attempt to mainstream green energy, incorporating it into the power grid at “avoided cost” rates, which are typically understood as the fuel costs of traditional power plants.

But no matter what legislators might wish, wind energy is not the same as traditional fuel. And while the relative cost of wind can be debated to no end, its biggest inconvenience is well-known: integration. Also known as wind firming or wind-stabilization, integration requires that fuel-based energy kicks in when the wind dies down, allowing for the uninterrupted flow of power to consumers.

Integrating the wind thus requires a second power source, officially referred to as the regulating reserve capacity.

The primary argument between the TDW and NWE is simple: Who should pay to integrate the wind? Each party’s viewpoint was unsurprising. NWE held that Two-Dot Wind is responsible for these expenses, which it judged to be substantial, while TDW judged its integration costs negligible.

But resolving how much integration actually costs is intensive and expensive.

Conducting a study to settle the question would cost more than the integration fees these parties are quarrelling over. To further complicate the decision making, there is little precedent on which to base an estimate.

Prior to the lobbying efforts of NWE, the PSC had formally considered TDW’s integration costs to be negligible. But NWE argued that there were hidden costs in integrating wind power, such as a decreased reliability rating, and the PSC agreed that integrating TDW was not a negligible expense. The commissioners settled upon a compromise: TDW will have to pay an integration fee, but the amount will be smaller than that calculated by NWE.

The case, and its resolution, leave many unanswered questions. NWE, a state-sanctioned monopoly, seemed happy to point out the legally imposed costs of cooperating with Two-Dot Wind, but failed to mention that the relationship also brought in generous state incentives as part of the Green Tag Purchase Program.

Showing even more audacity, NorthWestern Energy recently launched its “Green Product Offering,” which gives its Montana customers the option of paying $2 extra on their monthly bill “to support the development of renewable resources.”

It would seem that NorthWestern Energy wants to have its cake and eat it too.

When constrained to work with Two-Dot Wind, the utility both drags its feet and promotes its involvement with the small, idyllic wind farm splashed across the cover of a NWE brochure.

NWE knows how to capitalize on consumer anxieties about the environment. But when it comes to truly supporting the small business that is making wind power in Montana a reality, NWE stands starkly on the other side of the fence, unwilling to ease the incorporation of such sustainable resources into Montanans’ power consumption.

Perhaps all this points to a necessary change in public focus. Rather than looking to massive cure-alls, let’s get behind the small and local solutions. Most Montanans who read their newspapers are already aware of the harm possible when one utility monopolizes the state. And if you’re concerned about our environment and our state’s economy, what could be more responsible than writing our Public Service Commission and having your support for sustainability heard?

Ann Baggett is with Matney-Fritz Engineering of Bozeman.

Billings Outpost

9 July 2008