Customer energy efficiency programs in Montana are provided by utilities or in selected cases by a state agency. NorthWestern Energy, the state's largest utility and provider of electricity to 90% of the state population, funds programs through a lost revenue adjustment mechanism. Programs also receive funding from a universal system benefits charge paid by all customers of competitive electricity providers and cooperative utilities. The Montana Public Service Commission oversees the programs. The Montana Department of Revenue ensures all of the money is spent on qualifying programs.
Montana electric utilities saved 113,558 MWh through efficiency programs in 2010, equal to 0.85% of sales. Reported 2011 budgets for electric programs totaled approximately $21.1 million, and gas budgets $2.9 million. Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables for all states.
The Montana Public Service Commission reviews and approves each utility’s plans for the system benefits funding. Local cooperative governing boards approves the cooperatives’ plans.
Each utility or cooperative responsible for collecting the universal system benefits charge can choose to conduct the energy efficiency and renewable energy programs itself or turn the funds over to the Montana Department of Environmental Quality to administer. Likewise, each utility or cooperative can choose to run the low-income programs itself or turn the funds over to the Montana Department of Health and Social Services to administer.
In cases where the utility/cooperative is the administrator, the utility/cooperative can either use its own staff to implement the programs or hire contractors to do the work. Utilities and the statewide cooperative office are required to file annual reports with the Department of Revenue. The Department of Revenue ensures all of the money is spent on qualifying programs.
Western Montana is part of the Northwest region served by the Bonneville Power Administration. Consequently, that part of the state is also included in the activities of the Northwest Power and Conservation Council and the Northwest Energy Efficiency Alliance.
NorthWestern Energy is participating in a five-year smart grid demonstration project initiated by the Bonneville Power Administration with support from the U.S. Department of Energy. This project will extend through 2014.
Montana has commercial, residential, and residential low income natural gas efficiency programs implemented by the utilities and their subcontractors. Programs were mandated by statute in 1997 as part of natural gas restructuring. Electric utility efficiency programs saved 113,558 MWh in 2010.
NorthWestern Energy allows customers with demand larger than 1 MW to channel their cost-recovery mechanism (CRM) funds to an escrow account that repays them on a quarterly basis for completed self-direct projects. The annual maximum contribution is $500,000 and companies have two years to use their funds before they are returned to the larger pool of CRM revenues. NorthWestern administers the funds but provides no measurement or verification. Self-direct customers file annual reports with the Montana Department of Revenue. The department publishes these reports and a public "challenge" process is provided for as the only scrutiny or review. More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.
Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables.
Utilities include a universal system benefits charge for each customer meter. The state established this with Senate Bill 390 and later modified it with House Bill 337. In March 2009, the state eliminated the termination date for the charge (state statute Chapter 55).Based on the funding levels required by legislation, the Commission establishes rates ($/kWh) for the utilities and the governing boards of cooperatives establish rates ($/kWh) for the cooperatives. The companies' annual funding is based on the rate multiplied by the year’s annual kWh sales.
Reported electric program budgets totaled $21.1 million in 2011 and natural gas budgets totaled $2.9 million. Natural gas programs are funded through a combination of tariff rates and public benefits funds, referred to in state statute as universal system benefits charges.
Reported budgets for energy efficiency programs for 2011 for all states are in the State Spending and Savings Tables.
NorthWestern Energy was granted approval to recover lost revenue in 2004 and in 2008. A 2010 Commission Order required NorthWestern to implement decoupling. The Order was appealed in court and a settlement was reached in 2011, however the decoupling approach proposed by NorthWestern was rejected by the Commission. (Docket No. D2009.9.129 Order No. 7046i)
Following Montana Public Service Commission Guidelines, NorthWestern Energy completes an Electric Supply Resource Procurement Plan every two years. The most recent plan was filed in 2009 and stated a goal of achieving 84 aMW of energy savings over 15 years. A potential study in 2009 showed NorthWestern Energy could save 122 aMW cost-effectively. 84 aMW of this total – the utility’s goal – is achievable within the expected market conditions. Under Montana Code Annotated Sec. 69-8-419(2), the procurement process must evaluate "the full range of cost-effective electricity supply and demand-side management options."
Although energy efficiency is not prioritized within the plan, NorthWestern notes that energy efficiency programs help stabilize resource portfolio costs by reducing load. The annual DSM goal remains at 5 MW per year. The proposed savings of 5 MW per year diminishes the forecasted annual energy growth of supply customer load by nearly half.
The evaluation of ratepayer-funded energy efficiency programs in Montana relies on regulatory orders (Utility Division Docket No. D2003.6.77, Order No. 6496f and Utility Division Docket No. D2004.6.90, Order No. 6574e.). Evaluations are mainly administered by the utilities. There are no specific legal requirements for these evaluations in Montana, and the rules for benefit-cost tests are not specified. Evaluations are conducted for each of the utilities. Montana uses four of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC), Utility/Programs Administrator (UCT), Participant (PCT), and Social Cost (SCT) test. Montana specifies the TRC to be its primary test for decision making. The benefit-cost tests are required for the individual measure level for program screening, but there are exceptions for low-income programs, pilots, and new technologies.