(1) A public utility's default supply resource procurement plan pursuant to ARM 38.5.8201 through 38.5.8227 or integrated least cost resource plan pursuant to ARM 38.5.2001 through 38.5.2012 must thoroughly document compliance with the Montana Renewable Power Production and Rural Economic Development Act, 68-8-1001 , et seq, MCA, hereafter renewable resource standards. Public utilities must consider the requirements of this rule an integral part of the planning and procurement processes described in ARM 38.5.8201 through 38.5.8227 and 38.5.2001 through 38.5.2012.

(2) For public utilities operating in Montana within the geographic boundaries of the Western Electricity Coordinating Council, all renewable energy credits used to comply with the renewable resource standards must be tracked and verified through the Western Renewable Energy Generation Information System (WREGIS) or, if WREGIS is not operational, such other tracking system as the commission may approve on application of the utility. For public utilities operating in Montana within the geographic boundaries of Midwest Reliability Organization, all renewable energy credits used to comply with the renewable resource standards must be tracked and verified through the Midwest Renewable Energy Tracking System (MRETS) or, if MRETS is not operational, such other tracking system as the commission may approve on application of the utility.

(3) Before entering into a long-term contract to purchase renewable energy credits, with or without associated electricity, for purposes of complying with the renewable resource standards, a public utility must petition the commission to certify that the renewable energy credits were produced by an eligible renewable resource. The petition may stand on its own or may be part of a request for advanced approval of the price(s) , term, and quantity in a proposed contract to purchase renewable energy credits, either with or without associated electricity. If the applicable renewable energy tracking system in (2) provides a mechanism for ensuring that renewable energy credits are produced by eligible renewable resources, as defined in 69-8-1003 , MCA, a public utility may rely on that mechanism. Otherwise a public utility's petition must contain sufficient information on the source of the renewable energy credits to allow the commission to determine whether the source is an eligible renewable resource.

(4) A public utility may petition the commission for a waiver from full compliance with the renewable energy portfolio standards. The petition must include documentation and evidence showing that the public utility has undertaken all reasonable steps to procure renewable energy credits sufficient to comply with the applicable portfolio standards and could not achieve full compliance due to one or more of the following:

(a) the unavailability of sufficient renewable energy credits;

(b) a determination that integrating additional eligible renewable resources into the electrical grid would jeopardize the reliability of the electrical system despite reasonable efforts to mitigate reliability concerns;

(c) full compliance would cause the public utility to exceed the cost caps in 69-8-1007 , MCA; and

(d) other documented reasons beyond the public utility's control.

(5) The commission will rule on a petition for a waiver from full compliance with the renewable portfolio standards after noticing the petition and allowing an opportunity for a public hearing.

(6) A public utility may apply to the commission for advanced approval of a contract for the purchase of renewable energy credits with or without the associated electricity. An application by a public utility for advanced approval must incorporate by reference the public utility's most recent long-term resource plan, must include the public utility's most recent near-term action plan, and must provide:

(a) a complete explanation and justification of all changes, if any, to the public utility's most recent long-term resource plan and near-term action plan, including how the public utility has responded to all commission written comments on the long-term plan relevant to compliance with the renewable resource standards;

(b) a copy of the proposed contract, including all appendices and attachments, if any;

(c) testimony and supporting work papers demonstrating that the contract enables the public utility's compliance with the renewable resource standards in a manner that, to the fullest extent possible, is consistent with ARM Title 38, chapter 5, subchapter 20 or subchapter 82, whichever is applicable to the filing public utility;

(d) a copy of the request for proposals which preceded the proposed contract;

(e) a copy of all bids received;

(f) testimony and work papers demonstrating all due diligence and bid evaluation conducted by the public utility, including the application of bid rating mechanisms and management judgment;

(g) testimony and supporting work papers demonstrating that the price(s) , term, and quantity associated with the power purchase agreement are reasonable and in the public interest;

(h) testimony and supporting work papers demonstrating the calculation of the utility's avoided costs and associated cost caps provided for in 69-8-1007 , MCA;

(i) a thorough explanation and justification for any other terms in the power purchase agreement for which the public utility is requesting advanced approval; and

(j) testimony and supporting documentation related to any advice received from the public utility's stakeholder advisory committee regarding the proposed contract or the underlying resource/product and actions taken or not taken by the public utility in response to such advice.

(7) The commission will process a petition for advanced approval under the contested case procedures of the Montana Administrative Procedure Act. The commission will consider requests for expedited processing of petitions for advanced approval, but petitions submitted pursuant to this rule are not subject to the 180 day limit in 69-8-421 , MCA.

(8) If a public utility determines in its ongoing long-term planning process pursuant to ARM 38.5.8201 through 38.5.8227 or 38.5.2001 through 38.5.2012 that the cost of complying with the renewable resource standards will likely exceed the cost caps in 69-8-1007 , MCA, the public utility must submit an application to the commission no later than 180 days prior to the beginning of the compliance year. The application must thoroughly document the public utility's efforts to procure the required renewable energy credits, the calculated cost of compliance, work papers showing the most current calculation of the cost caps, an explanation of the methodology that underlies the calculation of the cost caps, and the amount by which the cost cap would be exceeded if the public utility were to comply with the renewable resource standards. Following notice of the application and an opportunity for a public hearing, the commission will issue an order authorizing or denying full or partial forbearance from the renewable resource standard for that compliance year.