Judge: Utility regulators biased against solar projects

HELENA — A state district court judge has concluded that Montana’s Republican-controlled Public Service Commission violated the due process rights of a solar energy company, writing that newspaper guest columns published by commissioners as a rate case was pending constitute evidence of bias.

In a June 18 ruling in a suit over the MTSUN project, an 80-megawatt solar farm proposed near Billings, Judge James Manley of Polson agreed with solar advocates who complained they weren’t getting fair treatment from the commission.

“The Commission violated MTSUN’s due process rights in this proceeding by making decisions based on bias and policy preferences and in conflict with the recorded evidence,” Manley wrote.

Attorneys for the PSC said the columns were a reasonable effort by elected commissioners to communicate with voters and that they expect the ruling to be appealed.

At issue in the case are the terms of contracts for MTSUN and other companies that want to develop solar power projects and sell energy into the Montana power grid, most of which is controlled by NorthWestern Energy. Solar developers are guaranteed access to the grid by a 1970s-era federal law, but it’s up to the PSC to referee disputes over contract lengths and rates.

It’s a tricky balance for commissioners to strike: Set rates too low, and renewable energy projects that could create jobs and diversify Montana’s electricity supply can’t sell their power for enough to break even. But set terms too favorable to solar projects and developers get a windfall, making out with comfy profits from NorthWestern, which passes the expense on to Montana consumers in the form of higher bills.

Complicating matters, Montana’s five public service commissioners, all Republicans, have made no secret of their affinity for coal power, and routinely express skepticism about the viability of renewable energy sources in guest opinion columns published by Montana newspapers.

“Out-of-state and foreign interests are applying increased pressure on lawmakers, and consumers, to replace base load power with wind, solar, and geothermal sources,” Commission Chairman Brad Johnson wrote in a column published this week by the Daily Inter Lake, Montana Standard, Great Falls Tribune and Bozeman Daily Chronicle. “I share the concern with many that shifting away from reliable base load power will eventually lead to brownouts.”

Citing similar op-eds and a 2017 “hot mic” comment when Commissioner Bob Lake appeared to admit the PSC was setting rates and contract lengths that discourage solar development, solar advocates have argued the commission isn’t giving them a fair shake.

Judge Manley, who in April handed solar advocates a win by ordering the PSC to revise its regulations so terms are more favorable to solar projects, agreed. “The published opinion articles criticizing solar developers are evidence of bias on the part of the Commissioners,” he wrote this month.

Court records in the case include five columns by commissioners Johnson, Roger Koopman, and Tony O’Donnell published by Montana newspapers in 2016 and 2017.

In one column, published by the Billings Gazette Aug. 4, 2016, Johnson argued that the PSC was simply trying to prevent utility consumers from subsidizing solar projects with higher electricity bills. He called the PSC’s critics “environmental activists” and accused “corporate solar developers” of “throwing ratepayers under the bus to boost their own profits.”

In another, published by the Great Falls Tribune, Missoulian, and Bozeman Daily Chronicle in January 2016, Koopman wrote that “coal-generated electricity is still among the cheapest, most reliable sources of energy available to Montana ratepayers — and would continue to be, if not for the extreme regulatory burden now bearing down on that industry by a power-obsessed federal agency (EPA) that apparently believes burning the U.S. Constitution is an acceptable CO2 emission.”

In the same piece, Koopman criticized renewable energy sources as less reliable than coal and natural gas plants, and called it an “unsettled question” whether CO2 emissions are “in net effect, a climatic calamity or an earth-greening benefit.” (Research by U.S. Environmental Protection Agency scientists estimates that unmitigated climate change will cost the U.S. economy “hundreds of billions” of dollars annually by the end of the century.)

In his ruling, Manley wrote that utility commissioners treated what should have been a judicial-style proceeding as an opportunity to advance a legislative-style agenda.

Elected bodies like the Public Service Commission, school boards, and city commissions in Montana must routinely navigate proceedings in which their members wear different legal hats, addressing “quasi-legislative” matters where board members have a lawmaker-like role in setting policy, and “quasi-judicial” ones where their job is to fairly apply existing rules to a particular situation.

“Here, the Commission improperly attempted to act as a quasi-legislative body by implementing new policy rather than acting as an impartial trier of fact,” Manley wrote.

Manley’s ruling orders the PSC to revise the contract terms for the MTSUN project. Like the April ruling, which applies to other projects, PSC attorneys say it’s likely to be appealed.

“There’s a delicate balance between allowing politically elected officials to explain their decision making to their constituents and ensuring that parties are provided fair process before tribunals like the PSC,” said PSC staff attorney Jeremiah Langston. “We believe that individual commissioners were correct to write to news outlets … but we welcome the Montana Supreme Court’s clarification on the issue.”

PSC Chairman Johnson declined through an agency spokesman to comment, citing “the sensitivity of the legal matter.”