09/22/2020 DA 19-0363 Case Number: DA 19-0363 IN THE SUPREME COURT OF THE STATE OF MONTANA 2020 MT 238 MTSUN, LLC, Applicant, Petitioner, and Appellee, v. THE MONTANA DEPARTMENT OF PUBLIC SERVICE REGULATION, MONTANA PUBLIC SERVICE COMMISSION, Respondent and Cross-Appellant, and NORTHWESTERN CORPORATION, d/b/a NORTHWESTERN ENERGY, Intervenor, Respondent, and Appellant, and THE MONTANA CONSUMER COUNSEL, Intervenor. APPEAL FROM: District Court of the Eighth Judicial District, In and For the County of Cascade, Cause No. BDV-17-0776 Honorable James A. Manley, Presiding Judge COUNSEL OF RECORD: For Appellant NorthWestern Energy: Ann B. Hill, NorthWestern Energy, Helena, Montana For Cross-Appellant Montana Public Service Commission: Zachary Taylor Rogala, Luke Casey, Justin Wade Kraske, Montana Public Service Commission, Helena, Montana For Appellee MTSUN, LLC: Michael J. Uda, Christine McMurry, Uda Law Firm, PC, Helena, Montana For Intervenor Montana Consumer Counsel: Jason T. Brown, Montana Consumer Counsel, Helena, Montana Submitted on Briefs: January 15, 2020 Decided: September 22, 2020 Filed: oe,,6tA- -if __________________________________________ Clerk 2 Chief Justice Mike McGrath delivered the Opinion of the Court. ¶1 The Montana Public Service Commission (“PSC”) and NorthWestern Energy (“NorthWestern”) appeal an order of the Eighth Judicial District Court, Cascade County, reversing and remanding the PSC’s order setting terms and conditions of MTSUN, LLC’s (“MTSUN”) proposed 80 megawatt (“MW”) solar project near Billings, Montana. ¶2 We restate the following issues on appeal as dispositive and do not address other issues raised: Issue One: Whether the District Court erred in determining that the PSC arbitrarily and unlawfully found that MTSUN did not establish a legally-enforceable obligation under PURPA and therefore was not entitled to agreed-upon contract terms. Issue Two: Whether the PSC exceeded its authority in upending the parties’ agreed- upon contract terms established by MTSUN’s legally-enforceable obligation. Issue Three: Whether the District Court erred when it concluded that the PSC arbitrarily and unreasonably calculated MTSUN’s capacity contribution in determining avoided costs. ¶3 We affirm. FACTUAL AND PROCEDURAL BACKGROUND ¶4 Before addressing the merits of the case, we contextualize the issues presented by providing necessary background information on the governing laws, practices of the PSC, and the relevant factual and procedural history of the present action. Regarding the background of applicable federal and state law, as well as the historical practices of the PSC, we incorporate by reference this Court’s discussion in Vote Solar v. Mont. Dept. of Pub. Serv. Regulation, 2020 MT 213, ¶¶ 4-17, 401 Mont. 85, ___ P.3d ___. 3 PURPA Background ¶5 In addition to the Public Utility Regulatory Policies Act (“PURPA”) background provided in Vote Solar, ¶¶ 3-17, it is necessary to discuss another component of PURPA that was not at issue in Vote Solar but is in this case. PURPA and Montana’s implementation of PURPA requires that for larger qualifying facilities (“QFs”)—those between three and 80 MWs—avoided-cost purchase prices be established between the QF and the purchasing public utility through a negotiated contract, on an “as available” basis, or pursuant to a “legally-enforceable obligation” (“LEO”), whereas smaller QFs—less than 3 MWs—receive a standard avoided-cost rate ...
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