New agreement aims to add renewable power to Montana’s grid

Two Montana communities have voted to approve the Green Power Program, which, pending approval by the state Public Service Commission, will add a new renewable energy source for local governments, businesses and eventually residents to tap into. 

Local officials say the Green Power Program, also referred to as a green tariff, is key to getting Bozeman and Missoula to their 100% clean electricity goals and will help decarbonize the electrical grid. Questions remain regarding how the partnership with NorthWestern Energy and existing state energy policy will affect the program and clean energy goals in general.

“I truly do believe that local government and our private sector need to be the leaders along with nonprofits,” Missoula City Councilwoman Gwen Jones said at a recent meeting where the council voted to approve the program. “We have to do this on a local level because it needs to happen yesterday, and I know this is a slow process to do it the right way, but we’re getting there.”

By approving the program, Bozeman and Missoula committed to bringing the Green Power Program with NorthWestern Energy before the Public Service Commission. Right now, the cities aren’t paying for the program since the costs have yet to be determined.

If approved, the program will seek proposals to build the new renewable energy project, with construction anticipated to begin in late 2025 or early 2026. At that time, the exact cost and benefits will be determined, and local governments can decide whether to pay for the program, opening the option for other NorthWestern Energy customers to participate.  

The Bozeman City Commission approved the program in November. In 2020, the commission pledged that the city would use 100% clean electricity by 2030.

“That was in recognition that we have to decarbonize our grid in order to achieve our carbon neutrality goals,” Natalie Meyer, the sustainability program manager for Bozeman, said at a recent meeting.

Despite being a first for Montana, many neighboring states, including Wyoming, South Dakota and a project pending approval in Idaho, have implemented green tariff programs. According to the Clean Energy Buyers Association, green tariff programs are “particularly useful for customers in states with vertically integrated utilities with no retail choice,” which is the case in Montana. Being vertically integrated means NorthWestern is responsible for generating, transmitting and distributing power.

It won’t be clear what type of renewable energy — like solar or wind — will be built until the project gets further along. But a key component is that the power source will be new and there will be the potential for backup storage. This differentiates it from NorthWestern Energy’s E+ Green Program, which doesn’t add any new clean energy to the grid but allows customers to pay extra in their monthly bills to reduce their carbon footprint and support renewable energy projects.

Caroline Bean, Missoula County’s climate action program manager, said that’s how the Green Power Project helps decarbonize the electrical grid and how municipalities can inch closer to their clean energy goals.

“It’ll be a new renewable energy project in the state of Montana that would not have happened without our work,” Bean said at the Missoula meeting.

If the program is approved by the PSC, any local government, commercial or industrial customer of NorthWestern Energy can sign a subscription agreement to participate through the “depreciable life of the project,” estimated at 25 years. Residents can opt in as well if they live in a jurisdiction that has signed onto the project and are NorthWestern Energy customers. Residents will have the option to sign on for a shorter time. 

Officials say the program allows customers with clean electricity goals, including cities, to get closer to 100%, without being limited by NorthWestern’s portfolio, which sits at around 58%, because of the added renewable energy source.

There is a 50-megawatt cap on new renewable energy generation for the Green Power Project. Bean said this limit was put in place to make it easier to get the project through its various stages, and she hopes “resounding interest” makes it easier to get future projects off the ground. The cap is much higher than the net-metering limit for what homes or businesses with solar panels can generate. Per state law, that’s limited to 50 kilowatts. 

Participation is optional, and any possible costs or benefits would only affect those subscribing. The program would not affect those already producing their own power through a net-metered system. Both add renewable energy to the grid. 

The rate design has two parts — a fixed cost and a floating credit. 

Subscribers pay the cost as a line item on their utility bill that goes toward the construction, operation and maintenance of the new renewable energy resource. The floating credit is tied to the market value of electricity each month. Bean said the models of this rate structure show “either a modest premium or a modest credit.” Another cost analysis will be done before construction.

The reason for a possible premium for subscribers is that the program is designed to only affect subscribers instead of being spread out across all of the utility’s customers.

Amy Cilimburg, executive director of Climate Smart Missoula, a nonprofit focused on climate solutions, was frustrated with the pace of the project but said it was a good step forward. Cilimburg said the 100% clean electricity goal can’t really be reached without NorthWestern or without local elected officials adding support in the form of policy and commitment.

“We can’t get here by just a bunch of do-gooders in the community,” Cilimburg said.

Cyndee Fang, vice president of regulatory affairs for NorthWestern Energy, said a lot of time was spent on the program’s design. Adding a burden to non-paying customers was something the company felt could stand in the way of getting the program approved by the PSC, Fang said, so it was important that the program only impact those who subscribed.

“In our ability to specifically address one group of customers’ interests and be able to manage the costs appropriate with that, we hope that this will be successful before the commission,” Fang said.

NorthWestern Energy would generate income from the project and would also own it. Those elements are conditions of the regulatory environment in Montana, said Evora Glenn, climate and sustainability specialist for the city of Missoula. Revenue gained and rates set for customers are set by the Public Service Commission.

Glenn said if Montana had laws that set renewable energy standards for NorthWestern, there would be more leverage to discuss the nature of the Green Power Program.

“Since it’s absolutely voluntary, there’s not a lot of room to negotiate some of these larger context issues that are part of just general operations of the utility,” Glenn said.

Glenn said NorthWestern Energy doesn’t explicitly share Missoula’s clean electricity goal and that their timelines are different. Net neutrality by 2050 — NorthWestern’s goal — is much different than 100% clean electricity by 2030 — Missoula’s goal — she said. 

Other projects in Missoula have chipped away toward the goal, like the Electrify Missoula campaign, which focuses on helping residents make use of rebates from the Inflation Reduction Act to install rooftop solar systems, and installing solar panels on Missoula’s wastewater treatment plant and detention center in 2023 and 2021, respectively.

The Green Power project could get Missoula up to 70% clean electricity, Glenn said. Meyer said the same thing goes for Bozeman but added that the increase depends on the level of commercial participation.

“There’s meaningful progress to be had here, and we also know that it will not be sufficient,” Glenn said at the Missoula meeting. “We need to keep pushing in all the other paths we’re exploring as well as pushing for subsequent phases of this work.”