Montana Commission Adopted New Competitive Bidding Rules

At the December 20, 2022 Business Meeting, the Montana Public Service Commission (the Commission) adopted new rules on electric utility competitive bidding and other issues. The new rules took effect on January 14, 2023. 

The Commission launched this rulemaking in early 2021 in response to the Montana State Legislature’s direction in House Bill 597 of 2020. Among other changes, that bill declares that the “policy of the state [is] to encourage utilities to acquire resources using a competitive solicitation process.” Although the Commission had competitive bidding rules prior to this rulemaking, some of those rules had not been updated since their original adoption in 1992.

The new competitive bidding rules, 38.5.2024 and 38.5.2025, contain several substantive improvements. For one example, the use of requests for proposals (RFPs) is required “whenever practicable,” instead of being “preferred.” Secondly, the rules provide a specified procedural posture, including requiring utilities to file draft RFPs with the Commission at least 70 days before issuing them and a 45-day time period for interested persons to comment on RFP design. Finally, the new rules contain language requiring utilities to disclose scoring criteria, including a “clear, objective rubric [for non-price scoring criteria] that reasonably enables bidders to self-score.” This is not a comprehensive summary of the changes.

The rulemaking was contentious, and Commission Staff undertook several revisions before the above changes were finalized. The investor-owned utilities, Northwestern Energy and Montana-Dakota Utilities, broadly decried similar versions of the new rules as overreaching HB 597 and Commission authority. By contrast, stakeholders such as the legislative bill sponsor Representative Daniel Zolnikov, the Northwest & Intermountain Power Producers Coalition (NIPPC), Montana Environmental Information Center, NW Energy Coalition, Natural Resources Defense Council, Montana Large Customer Group, Broad Reach Power LLC, and others were broadly supportive of substantially updating the existing rules. For example, NIPPC’s written comments identified best practices in other Western states, like an adequate public comment period and opportunity for bidders to self-score, and urged Staff to align the Commission’s RFP rules with the examples set by other jurisdictions. Still, the divide between utility and non-utility stakeholders was significant enough to attract local news press after a heated rulemaking hearing on an earlier, significantly weaker version of the rules. The Commission made significant changes to that version based on stakeholder feedback in oral and written comments.

Sanger Law PC and Rhoades Siefert & Erickson PLLC represented NIPPC in the above rulemaking.

NIPPC represents electricity market participants in the Pacific Northwest, including independent power producers, electricity service suppliers, and transmission companies. NIPPC is committed to facilitating cost-effective electricity sales, offering consumers choices in their energy supply, and advancing fair, competitive power markets.

These materials are intended to as informational and are not to be considered legal advice or legal opinion, nor do they create a lawyer-client relationship. Information included about previous case results does not assure a similar future result.