BEFORE THE DEPARTMENT OF PUBLIC SERVICE REGULATION

                                                               OF THE STATE OF MONTANA

 

 

INTRODUCTION

 

1.  On November 27, 2009, NorthWestern Corporation d/b/a NorthWestern Energy (NWE) filed a Petition for Declaratory Ruling certifying Turnbull Project as a Community Renewable Project (Petition).  On December 9, 2009, the Public Service Commission (Commission) issued a Notice of Petition and Opportunity to Comment (Notice).  In the Notice, the Commission stated, "NWE's Petition requires the PSC to construe the term 'local owners.'  The PSC requests comments on the Petition, particularly the meaning of [§] 69-3-2003(11), MCA (2009)."

2.  Greenfield Irrigation District, Marcie Shaw, Selway Corporation, Fairfield Chamber of Commerce, Heberly and Associates, and First Interstate Bank (collectively Commenters) filed comments supporting the Petition.  None of the Commenters provided any analysis of or reference to § 69-3-2003(11), MCA (2009).

3.  Section 2-4-501, MCA (2009), provides, in part, "Each agency shall provide for the filing and prompt disposition of petitions for declaratory rulings as to the applicability of any statutory provision or of any rule or order of the agency."  The Public Service Commission (Commission) has adopted ARM 38.2.101 which, in part, adopts ARM 1.3.226 – 1.3.229.  ARM 1.3.226 – 1.3.229 govern the Commission's consideration of and action on requests for declaratory rulings.

4.  A petition for declaratory ruling must include: (a) the name and address of the petitioner; (b) a detailed statement of the facts upon which the petitioner requests the agency to base its declaratory ruling; (c) sufficient facts to show that the petitioner will be affected by the requested ruling; (d) the rule or statute for which the petitioner seeks a declaratory ruling; (e) the questions presented; (f) propositions of law asserted by the petitioner; (g) the specific relief requested; and (h) the name and address of any person known by petitioners to be interested in the requested declaratory ruling.  ARM 1.3.227(2).

ANALYSIS

 

5.  The Petition clearly contains all of the required items.

6.  NWE stated the question presented as follows:

Does the Turnbull Project as described [in the Petition] qualify as a 'community renewable energy project' as that term is defined by Mont. Code Ann. §69-3-2003(4) (2009)?

            7.  NWE presented the following facts on which it requested the Commission to base its declaratory ruling:

(a)  NWE has executed a power purchase agreement with Turnbull Hydro, LLC. (Turnbull Hydro);

(b)  Turnbull Hydro is a limited liability company organized under the laws of Montana and is owned by Sorenson Montana, LLC (45%), Josten Montana, LLC (22.5%), Wade Jacobsen (22.5%), and Greenfields Irrigation District (10%);

(c)  Sorenson Montana, LLC is a limited liability company organized under the laws of Montana and is owned by Ted Sorenson (100%) who is an Idaho resident;

(d)  Josten Montana, LLC is a limited liability company organized under the laws of Montana and is owned by Nick Josten (100%) who is an Idaho resident;

(e)  Wade Jacobsen is a Montana resident;

(f)  Greenfields Irrigation District is an irrigation district created under § 85-7-101, MCA (2009);

(g)  Turnbull Hydro's sole purpose is the development of small hydroelectric projects in Montana;

(h)  Turnbull Hydro is constructing the Turnbull Project; and

(i)  The Turnbull Project will consist of two hydroelectric facilities connected to the electric grid on the NWE side of the meter, with a combined nameplate capacity of 13 megawatts (MWs), and located on an existing irrigation canal west of Fairfield, Montana.

8.  The Commission restates the propositions of law asserted by NWE as follows:

(a)  Turnbull Hydro is a local owner as defined in § 69-3-2003(11), MCA, because it is a Montana resident or because it is a Montana small business;

(b)  A limited liability company domesticated in Montana is a Montana resident;

(c)  An entity that develops projects solely in Montana is located in or principally based within Montana and, therefore, a Montana business;

(d)  An entity that is engaged in the generation of electric energy for sale is a small business if its total output for the preceding year did not exceed 4 million megawatt hours;

(e)  An entity that has a net worth of less than $6 million, an annual net income of less than $2 million for the preceding two years, and less than 200 employees working in Montana is a small business;

(f)  The Turnbull Project qualifies as an eligible renewable resource as defined by § 69-3-2003(10), MCA (2009); and

(g)  The Turnbull Project qualifies as a community renewable energy project because it is an eligible renewable resource that is interconnected on the utility side of the meter, locally owned, and has a total nameplate capacity of less than 25 MWs.

9.  First, the Commission must determine if the Turnbull Project will be an eligible renewable resource.  "Eligible renewable resource means . . . a facility located in Montana . . . that commences commercial operation after January 1, 2005, and that produces electricity from . . . (d) water power, in the case of a hydroelectric project that: . . . (ii) is installed at an existing reservoir or on an existing irrigation system that does not have hydroelectric generation as of April 16, 2009, and has a nameplate capacity of 15 megawatts or less."  §69-3-2003(10), MCA (2009).

10.  The Turnbull Project is located in Montana.  It will commence commercial operation after July 1, 2005.  It is being installed on an existing irrigation system.  It has a nameplate capacity of less than 15 MWs.

11.  NWE did not present a factual representation that the existing irrigation system did not have hydroelectric generation as of April 16, 2009.

12.  The Commission concludes that the Turnbull Project will be an eligible renewable resource if it is constructed as described, and if there was no hydroelectric generation on the existing irrigation canal on April 16, 2009.

13.  Second the Commission must determine if the Turnbull Project is one in which local owners have a controlling interest.  "Local owners means (a) Montana residents or entities composed of Montana residents; (b) Montana small businesses; (c) Montana nonprofit organizations, (d) Montana-based tribal councils; (e) Montana political subdivisions or local governments; (f) Montana-based cooperative other than cooperative utilities; or (g) any combination of the individuals or entities listed in subsections (11)(a) through (11)(f)."  § 69-3-2003(11), MCA (2009).

14.  Wade Jacobsen is a Montana resident and a local owner.

15.  Greenfields Irrigation District is a public corporation for the promotion of the public welfare.  § 85-7-109, MCA (2009).  A public corporation is a political subdivision.  § 2-9-101(5), MCA (2009).  Greenfields Irrigation District is a local owner.

16.  NWE asserts:  [S]ince Turnbull Hydro is a Montana limited liability company and its four members are all either Montana limited liability companies, individuals living and residing in Montana, or irrigation districts created pursuant to Montana law, then it logically follows that Turnbull Hydro as a corporate entity, should qualify as a "Montana resident for purposes of Mont. Code Ann. § 69-3-2003(11)(a)."

17.  The Commission has not found any reported Montana case that establishes an artificial entity can be a resident of a state.  Such a conclusion seems contrary to the definition contained in § 69-3-2003(11)(a), MCA (2009), which references Montana residents and entities composed of Montana residents.  If an entity could be a Montana resident, there would have been no need for the Legislature to add "entities composed of Montana residents."  The Commission finds that Turnbull Hydro; Sorenson Montana, LLC; and Josten Montana, LLC are not Montana residents.

18.  Section 69-3-2003(11)(b), MCA (2009), references Montana small businesses.  The Legislature has not defined Montana small business in any statute.  However, by inclusion of the term, the Legislature must have meant something other than entities composed of Montana residents.  Otherwise, there would have been no need for the Legislature to include Montana small businesses as a local owner.  Although the Legislature has not provided any guidance, the Commission is persuaded that an entity organized in Montana, developing hydroelectric projects solely in Montana, and with a maximum theoretical electric output of less than 115,000 megawatt hours annually is a Montana small business.  The Commission determines that Turnbull Hydro is a Montana small business and local owner.

19.  Local owners have a controlling interest in the Turnbull Project.

20.  Third, the Commission must determine if the Turnbull Project is interconnected on the utility side of the meter and is less than or equal to 25 MWs in total nameplate capacity.  NWE has presented factual representations that the Turnbull Project will be interconnected on NWE's side of the meter and has a total nameplate capacity of 13 MWs.  The Commission determines that the Turnbull Project if constructed and owned as represented by a company of the size represented will be a community renewable energy project.

21.  The Commission cautions NWE that the Turnbull Project must be registered with and have renewable energy credits produced by it tracked by WREGIS for NWE to use them to meet the standards established by § 69-3-2004, MCA (2009).  ARM 38.5.8301(2).

 

DECLARATORY RULING

 

On the Petition of NorthWestern Corporation d/b/a/ NorthWestern Energy for a declaratory ruling, the Commission rules that the Turnbull Project, if built and owned as described in the Petition, and if there was no hydroelectric generation as of April 16, 2009, on the canal on which the project will be built, will be a community renewable energy project as defined by § 69-3-2003(4), MCA (2009).

 

DATED this 21st day of January 2010 by a vote of 5 to 0

 

MONTANA PUBLIC SERVICE COMMISSION

 

s/ Greg Jergeson

GREG JERGESON

Chairman

 

 

s/ Ken Toole

KEN TOOLE

Vice-Chairman

 

 

s/ Gail Gutsche

GAIL GUTSCHE

Commissioner

 

 

s/ Brad Molnar

BRAD MOLNAR

Commissioner

 

s/ John Vincent

JOHN VINCENT

Commissioner

 

NOTICE:         Petitioner has the right to appeal the decision of this agency by filing a petition for judicial review in district court within 30 days after service of this decision.  Judicial review is conducted pursuant to § 16-4-411, MCA.

 

CERTIFICATE OF MAILING

 

            The undersigned hereby certifies that on the 28th day of January 2010, a true and correct copy of the foregoing has been serviced by placing same in the United States Mail. Postage prepaid, addressed as follows:

 

Jason Williams

Northwestern Energy

40 E. Broadway

Butte, Montana 59701

 

 

/s/ Verna Stewart

PSC Commission Secretary