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Incentives/Policies for Renewables & Efficiency

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Renewable Resource Standard   

Last DSIRE Review: 09/08/2014
Program Overview:
State: Montana
Incentive Type: Renewables Portfolio Standard
Eligible Renewable/Other Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Compressed Air Energy Storage, Battery Storage, Fly Wheel Storage, and Pumped Hydro (From Eligible Renewables), Anaerobic Digestion, Fuel Cells using Renewable Fuels
Applicable Sectors: Investor-Owned Utility, Retail Supplier
Standard:15% by 2015
Technology Minimum:No
Credit Trading:Yes (M-RETS, WREGIS)
Credit Transfers Accepted From:None
Credit Transfers Accepted To:M-RETS into MIRECS, NAR, NC-RETS
(Refers to tracking system compatibility only, not RPS eligibility. Please see statutes and regulations for information on facility eligibility)
Authority 1:
Date Enacted:
MCA 69-3-2001 et seq.
Authority 2:
Date Effective:
MONT. ADMIN. R. 38.5.8301

Montana’s renewable portfolio standard (RPS), enacted in April 2005 as part of the Montana Renewable Power Production and Rural Economic Development Act, requires public utilities and competitive electricity suppliers serving 50 or more customers to obtain a percentage of their retail electricity sales from eligible renewable resources according to the following schedule:

  • 5% for compliance years 2008-2009 (1/1/2008 - 12/31/2009)
  • 10% for compliance years 2010-2014 (1/1/2010 - 12/31/2014)
  • 15% for compliance year 2015 (1/1/2015 - 12/31/2015) and for each year thereafter

Eligible Technologies
Eligible renewable resources include wind; solar; geothermal; existing hydroelectric projects (10 megawatts or less); certain new hydroelectric projects (up to 15 megawatts installed at an existing reservoir or on an existing irrigation system that did not have hydroelectric generation as of April 16, 2009); landfill or farm-based methane gas; wastewater-treatment gas; low-emission, non-toxic biomass; and fuel cells where hydrogen is produced with renewable fuels. SB 106 allows for flywheel storage, hydroelectric pump storage, batteries, and compressed air storage to generate RECs based upon the portion of electricity produced that is attributable to renewable sources. Facilities using these resources must begin operation after January 1, 2005, and must either be located in Montana or located in another state and be delivering electricity into Montana. Two bills in 2013 expanded the RPS to include additional types of projects. SB 325 of 2013 allows wood pieces that have been treated with chemical preservatives, such as creosote, pentachlorophenol, or copper-chrome arsenic, and that are used at a facility that has a nameplate capacity of 5 megawatts or less, to qualify. SB 45 of 2013 allows expansions to existing hydroelectric projects that result in increased generation capacity to qualify.

Utilities and competitive suppliers can meet the standard by entering into long-term purchase contracts for electricity bundled with renewable-energy credits (RECs), by purchasing the RECs separately, or by a combination of both. RECs sold through voluntary utility green power programs may not be used for compliance. Before entering into a long-term contract to purchase RECs, with or without the associated electricity, a utility must petition the PSC to certify that the RECs were produced by an eligible renewable resource.

Montana's RPS includes specific procurement requirements to stimulate rural economic development. The RPS includes provisions for community renewable energy projects, defined as renewable energy projects under 25 megawatts (MW) where local owners have a controlling interest. For compliance year 2012 through compliance year 2014, public utilities* must purchase both the renewable-energy credits (RECs) and the electricity output from community renewable-energy projects totaling at least 50 MW in nameplate capacity. For compliance year 2015 and each following year, utilities must purchase both the RECs and the electricity output from community renewable-energy projects totaling at least 75 MW in nameplate capacity. In addition, public utilities must enter into contracts that include a preference for Montana workers.

While cooperative utilities and municipal utilities are generally exempt from these requirements, cooperative and municipal utilities with 5,000 or more customers must implement a renewable-energy standard that recognizes the "intent of the legislature to encourage new renewable-energy production and rural economic development, while taking into consideration the effect of the standard on rates, reliability and financial resources."

Public utilities and competitive suppliers must submit annual reports to the Montana Public Service Commission (PSC) demonstrating compliance with their RPS requirements. A utility or competitive supplier unable to comply with the RPS during an annual period, including a three-month grace period, must pay an administrative penalty of $10 per megawatt-hour (MWh) for RECs that the utility failed to procure. Penalty payments may not be recovered in electricity rates. Funds derived from penalties go into the universal low-income energy assistance fund. Alternatively, a utility may petition the PSC for a short-term waiver from full compliance. If a utility or competitive supplier exceeds the standard in any year, it may carry forward the amount by which the standard was exceeded to comply with the standard in either or both of the two subsequent compliance years.

For utilities operating in Montana within the geographic boundaries of the Western Electricity Coordinating Council, all RECs used to comply with the standard must be tracked and verified through the Western Renewable Energy Generation Information System (WREGIS). For public utilities operating in Montana within the geographic boundaries of Midwest Reliability Organization, all RECs used to comply with the standard must be tracked and verified through the Midwest Renewable Energy Tracking System (MRETS).

Cost Mitigation Measures
The law includes cost caps that limit the additional cost utilities must pay for renewable energy. Public utilities that have not restructured are not obligated to purchase eligible renewable electricity if its cost exceeds 15% of the cost of power from any other alternate resource. Cost caps with specific provisions also apply to public utilities that have restructured and competitive suppliers. The law also allows cost recovery from ratepayers for contracts pre-approved by the PSC. 

Legislation (HB 681) enacted in 2007 made competitive electricity suppliers subject to the RPS, as the original law applied only to public utilities. Legislation (SB 164) enacted in 2013 exempted public utilities serving 50 or fewer customers from the RPS requirements.

*Competitive electricity suppliers are not subject to the community renewable energy project requirement.

  Will Rosquist
Montana Public Service Commission
1701 Prospect Avenue
Vista Building
Helena, MT 59620-2601
Phone: (406) 444-6359
Phone 2: (406) 444-6199
Fax: (406) 444-7618
Web Site:
  Kathi Montgomery
Montana Department of Environmental Quality
Energy Planning & Renewable Energy
1520 East Sixth Ave.
PO Box 200901
Helena, MT 59620
Phone: (406) 444-6586
Fax: (406) 444-6836
Web Site:
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

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