Reforms could remove hurdles

Recommendations to Montana Governor Judy Martz from a state energy task force to partially re-regulate the state's electric system could, if implemented, help two wind developers get financing for their projects as early as late spring 2004.

The companies are Navitas and Wind Park, which are each developing 70-80 MW projects after being selected more than six months ago from responses to a NorthWestern Energy request for project proposals for 150 MW of wind energy. Financing for both projects stalled, however, with the decline in financial health and subsequent bankruptcy of NorthWestern Corp, the utility's parent company (Windpower Monthly, October 2003). The resulting low credit rating of NorthWestern means that even with power purchase agreements, developers are having trouble gaining financing because lenders fear the utility could default on payments for electricity from the wind energy projects.

The utility's Claudia Rapkoch says the Chapter 11 bankruptcy declaration in September has actually stabilised the company's financial situation and it expects to be back on its feet in the summer. That, however, will not resolve all the issues with getting project financing. The state Public Utility Commission has routinely refused to approve generating projects ahead of a PPA. "They [the PUC] would rather look at projects in hindsight, rather than up front and that adds even more uncertainty to the financing process," says Rapkoch.

Adding certainty

While the task force cannot change the utility's bankruptcy process, one of its recommendations, delivered to the governor in late October, will likely influence what happens with the PUC. It wants the state to order the Montana PUC to review and give advanced approval before a project's contract is finalised. That would add certainty that NorthWestern could recover the costs of a project and pay the developer.

A missing piece in getting regulators to look at contracts ahead of time is a long term plan for purchasing resources, such as an integrated resource plan, which the utility has not had up to this point. North Western will release such a plan this month, says Rapkoch, that will look at all energy resources needed by the utility, including bringing on more wind energy than is covered by the 150 MW contracts.

"The plan will outline the load following and peaking energy that will enable us to bring on more wind energy than we have contracted to date," she says. "That has been a sticking point with us and is essential to bring on more wind. We hope to have something going in 2004."