Vote Solar v. Montana Department of Public Service Regulation

The Montana Supreme Court agreed with a lower court that the Montana Public Service Commission’s (PSC’s) reduction of standard-offer contract rates and maximum contract lengths for small solar qualifying facilities (QFs) violated the Public Utility Regulatory Policies Act (PURPA) and Montana law. The court concluded that the record did not support the PSC’s decision not to include a “carbon adder” when setting the utility’s avoided-cost rate; the PSC had decide not to include it because the change in presidential administrations decreased the likelihood of carbon emissions regulation. The court held that exclusion of carbon dioxide emissions cost violated PURPA, stating: “While carbon price forecasting may be innately difficult, to assign carbon pricing a value of ‘zero’ because of its speculative nature simply does not compensate QFs for the full avoided-cost rate.” The court further found the PSC justification for the exclusion to be arbitrary because it was inconsistent with the PSC’s inclusion of a carbon adder in another recent case involving purchase of wind energy from small QFs. In addition, the Supreme Court also affirmed the lower court’s findings of other violations.