Montana implemented its RPS in 2005 when Governor Brian Schweitzer signed HB 415 into law. HB 415 requires Montana utilities to purchase at least 15 percent of energy generation from renewable sources by 2015. Qualifying sources include wind, solar, geothermal, existing hydroelectric projects, landfill or farm-based methane gas, wastewater-treatment gas, low-emission, nontoxic biomass, and hydrogen fuel cells. The law sets graduated targets for the end of each compliance year to 2015. By the end of 2009 Montana utilities had to produce five percent of retail sales from qualifying sources. By the end of 2014 the target is 10 percent, and finally 15 percent by the end of 2015.
Utilities may purchase renewable energy certificates (RECs) to comply with the mandate. The law also charges utilities a $10 per-megawatt of renewable energy credit penalty if they do not meet the targets. The utilities may apply for a waiver from the penalties. The law provides caps, which limit the costs utilities pay for renewable energy, and allows for cost recovery from ratepayers for preapproved contracts.
Utilities must sign ten-year contracts to purchase renewable energy or RECs, or demonstrate to the Montana Public Service commission why shorter contracts will provide a lower long-term cost of meeting the standard.
To meet the law’s rural economic development requirement, utilities are required to purchase RECs and electricity from community renewable energy projects of at least 50 megawatts through 2014, and 75 megawatts after 2015.
Utilities may seek exemption from the RES if the PSC determines complying with the mandate exceeds three particular cost caps.
1. Utilities are not required to obtain renewable energy if total cost of electricity from that eligible resource, including the associated cost of ancillary services necessary to manage the transmission grid and firm the resource, is less than or equal to bids for the equivalent quantity of power over the equivalent contract term from other electricity suppliers.
2. Utilities are not required to obtain renewable energy if the cost per kilowatt hour of the generation from the renewable source exceeds the cost of power from any other alternate generating source by 15 percent.
3. the total cost of the electricity from that eligible renewable resource, including ancillary services, is less than or equal to a cost cap determined by the PSC based on the cost of alternate power supplies available to the competitive electricity supplier; and the cost caps applicable to other utilities.
HB 415 also mandates contractors for any renewable energy construction projects to pay the standard prevailing wage for heavy construction projects.
In 2009, HB 255 aimed to increase Montana’s RPS requirement to 20 percent by 2020. However, that bill died in committee.
In 2011 legislative session Governor Schweitzer signed SB 7, which requires the price of any renewable energy credit for sale or use in the the state to be listed in a report to the PSC.
Sources: HB 415, HB 255 , Montana Annotated Code 69-3-2007
ATI Report: The Economic Impact of Montana’s Renewable Portfolio Standard