Montana Administrative Register Notice 38-5-256 No. 21   11/04/2022    
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In the matter of the adoption of New Rules I through VI and the repeal of ARM 38.5.2001, 38.5.2002, 38.5.2003, 38.5.2004, 38.5.2005, 38.5.2006, 38.5.2007, 38.5.2008, 38.5.2009, 38.5.2010, 38.5.2011, 38.5.2012, 38.5.2016, 38.5.8201, 38.5.8202, 38.5.8203, 38.5.8204, 38.5.8209, 38.5.8210, 38.5.8211, 38.5.8212, 38.5.8213, 38.5.8218, 38.5.8219, 38.5.8220, 38.5.8221, 38.5.8225, 38.5.8226, 38.5.8227, and 38.5.8229 pertaining to resource planning
















TO: All Concerned Persons


            1. On July 22, 2022, the Department of Public Service Regulation published MAR Notice No. 38-5-256 pertaining to the public hearing on the proposed adoption and repeal of the above-stated rules at page 1229 of the 2022 Montana Administrative Register, Issue Number 14.


2. The Department of Public Service Regulation will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Public Service Regulation no later than 5:00 p.m. on November 28, 2022, to advise us of the nature of the accommodation that you need. Please contact the Department of Public Service Regulation, 1701 Prospect Avenue, Helena, Montana, 59620-2601; telephone (406) 444-6199; fax (406) 444-7618; or e-mail pschelp@mt.gov.


3. The new rules proposed to be adopted are being amended from the original proposal as follows, new matter underlined, deleted matter interlined:


NEW RULE I GOAL AND POLICY (1) Integrated least-cost resource planning and acquisition is an ongoing, dynamic, and flexible process that:

(a) manages the consequences of risk and uncertainty;

(b) integrates demand-side, distribution-side, supply-side and power resources to minimize the long-term total cost of service;

(c) considers a broad range of attributes in the evaluation of alternative resources and their cost-effectiveness;

(d) engages stakeholders and the public; and

(e) is transparent and reasonably understandable to stakeholders, the public, and the commission.

(2) The goal of integrated least-cost resource planning and acquisition is to ensure public utilities meet their customers' needs for adequate, reliable, and efficient energy services at the lowest long-term total cost while managing risks and remaining financially sound. To achieve this goal, utilities should shall plan to meet future customer demand and energy requirements through timely acquisition of a diverse mix of cost-effective resources, and should shall actively pursue and acquire all cost-effective demand-side resources.  The cost-effectiveness of all resource acquisitions will should be evaluated with respect to long-term societal total costs, including scenarios based on societal costs.

(3) These rules implement the policy of the State of Montana concerning integrated least-cost resource planning and acquisition. Electric utilities are required to file resource plans and should conduct planning and acquisition processes as outlined in the rules.

(4) The rules implement the commission's regulatory objective of ensuring an efficient allocation of society's resources to provide the provision of adequate, reliable electricity services and just and reasonable rates for consumers. In furtherance of this objective, utilities shall should operate existing resources and acquire new resources only when needed and in a manner consistent with these rules.

(5) The rules provide public utilities guidance on establish requirements for resource planning and acquisition processes but do not specify planning and acquisition outcomes or mandate investment decisions. The rules identify ways for utilities to reduce and manage the risk of resource acquisition to shareholders, customers, and society.

(6) Utilities shall acquire resources through transparent, independently administered competitive resource solicitations whenever practicable, subject to 69-3-1207, MCA.

(6)(7) Integrated least-cost resource planning consistent with the rules may demonstrate that previously rate-based resources should be abandoned and replaced by new resources. If such situations occur, a utility or the commission may initiate separate proceedings to will determine the appropriate recovery of undepreciated, rate-based capital costs in separate, contested case proceedings.

(7)(8)  Evaluations of potential demand-side resources should shall consider those resources cost-effective up to 110 percent of the utility's long-term avoided cost.

(8)(9) Resource decisions have a significant impact on the public. Public utilities can best meet the respective goals of shareholders, customers, and society by meaningfully involving the public in resource planning and acquisition processes. The rules facilitate such involvement by requiring public utilities to conduct transparent planning and acquisition processes and thoroughly document the results of those processes in a manner that is reasonably understandable.


AUTH: 69-3-1204, 69-3-1206, MCA

IMP: 69-3-1204, 69-3-1205, 69-3-1206, 69-3-1207, 69-3-1209, MCA


            NEW RULE II DEFINITIONS (1) "Action plan period" means the five-year period beginning with the calendar year after the filing of a resource plan.

            (2) "Adequate" means, with respect to an electric system owned or controlled by a utility, the ability to supply the aggregate electrical demand and energy requirements of the utility's customers at all times, taking into account scheduled and reasonably expected unscheduled outages of system elements.

            (3) "Affiliate" means, for purposes of this rule, a person or organization officially attached to a utility through common ownership, common management, or the existence of a contract.

            (3) (4)  "Assessment" means a documented process used by a utility to make informed judgments regarding elements of a resource plan and action plan based on the careful consideration of quantitative and qualitative information and the input of stakeholders, the public, and the advisory committee required in 69-3-1208, MCA.

            (4) (5) "Cost" means the actual or forecast costs incurred to own, operate, and manage existing resources and procure potential new resources sufficient to provide adequate and reliable services over the planning period including, but not limited to, costs for: 

            (a) capital recovery;

            (b) shareholder returns;

            (c) debt;

            (d) operations and maintenance;

            (e) fuel and associated fuel delivery services or infrastructure;

            (f) insurance;

            (g) taxes, including tax credits;

            (h) environmental remediation;

            (i) permitting;

            (j) land use and rights of way;

            (i) (k) decommissioning, abandonment, and securitization;

            (j) (l) contractual power purchases, however structured;

            (k) (m) incremental transmission and distribution, including losses and congestion;

            (l) (n) administration; and

            (m) (o) externalities.

            (5) (6) "Cost-effective" means that a project or resource is forecast:

            (a) to be reliable and available within the time it is needed; and

            (b) to meet or reduce the electric power demand of the intended consumers at an estimated incremental system cost no greater than that of the least-cost similarly reliable and available alternative project or resource, or any portion thereof.

            (6) (7)  "Environmentally responsible" means explicitly recognizing and incorporating into resource plans, resource planning processes, and resource procurement the policy of the State of Montana to encourage utilities to acquire resources in a manner that will help ensure a clean, healthful, safe, and economically productive environment.

            (7) (8) "Externalities" has the meaning in 69-3-1203(6), MCA.

            (9)  "Long-term" means a time period at least as long as the planning period.

            (8) (10)  "Planning period" has the meaning in 69-3-1203(9), MCA.

            (9) (11) "Qualifying facility" means a resource as defined in 18 CFR part 292.101, and certified by the Federal Energy Regulatory Commission.

            (10) (12) "Reliable" means a power system that is adequate and can withstand sudden disturbances, such as electrical short circuits or unanticipated loss of system elements.

            (11) (13)  "Resources" includes all of the following:

            (a) "Demand-Side resources" means any material, device, technology, educational program, rate design, practice, or facility alteration designed to result in reduced peak demand, increased energy efficiency, energy conservation, or shifting or management of electricity demand and energy consumption and includes combined heat and power used to displace space heating, water heating, or another load.

            (b) "Distribution-Side resources" means electrical generation or storage equipment located within a utility's distribution system, including real and personal property owned and controlled by utility customers and non-utility producers.

            (c) "Power resources" means wholesale power transactions, including bilateral contracts, tolling agreements, and spot purchases, and plants and equipment, including storage equipment, owned, leased, or controlled, in whole or in part, by a utility.

            (12) (14)  "Service" means required and optional electricity and/or electricity-related products or services provided by a utility to retail customers including metering, billing, distribution, transmission, generation, and generation-related services. Services include, but are not limited to, traditional electricity supply and delivery service, renewable energy-sourced offerings, interconnection and integration of distribution side and customer generators, net metering, demand and/or bill management programs, information-based services such as energy audits, transmission ancillary services, street lighting services, and other services for which a utility has filed or would be required to file a tariff.

            (13) (15)  "Societal cost" means all costs to a utility plus externalities.

            (14) (16)  "Stakeholder" means a member of the public (individual, corporation, organization, group, etc.) who may have an interest in, or may be affected by, these rules.


AUTH:  69-3-1204, 69-3-1206, MCA

IMP: 69-3-1204, 69-3-1205, 69-3-1206, 69-3-1207, 69-3-1209, MCA


            NEW RULE III PLAN CONTENTS (1) Resource plans shall contain at least the following information:

            (a) A description of any changes a utility has made to the content of its plan or its planning process in response to the commission's comments on its last plan and how the changes affect the current plan, along with reasoned explanations for any commission comment with which the utility disagrees. Cross-references should shall be provided for all substantial changes.

            (b) Annual electricity demand and energy forecasts for each year of the planning period for each major rate or service class;, an explanation of the forecasting method(s) and assumptions; and the historical customer counts, population data, load data, and end-use data used in the forecasting process, as applicable. Changes to the forecasting method(s) and assumptions used in the prior plan must be thoroughly explained.

            (c) A description and graphical presentation of daily and seasonal electric demand and energy requirements for each major rate or service class, the variability of those requirements, and how the utility assessed historical trends, and the potential for future changes in the timing and variability of electric demand and energy requirements in the development of the plan.

            (d) A description of the electric generating capability and characteristics of each of the utility's existing resources. The description should must include the generator type and fuel source, nameplate capacity, effective load carrying capability or other probabilistic capacity contribution estimate, expected annual energy production, storage capability, capacity factor, forced outage rate, annual emissions of carbon dioxide, online date, and expected retirement date. The description must include any historical data used to develop the reported generating capabilities and characteristics. The description may be in table form with accompanying explanatory text, as necessary.

            (e) A description of the current average annual variable cost or contract price for each of the utility's existing power resources, including storage resources, and the expected or projected average annual variable cost or contract prices at 5-year increments for the planning period. The description may be in table form with accompanying explanatory text, as necessary.

            (f) A description of the aggregate load-serving capability and characteristics of existing programmatic demand-side resources within the utility's system and a forecast of aggregate capability over the planning period. The description should must address each demand-side resource program offered and its total load-serving capabilities. The description may be in table form with accompanying explanatory text, as necessary.  The description should must provide the following historical information for each year since the utility's last plan: 

            (i) program expenditures;

            (ii) incentive payments;

            (iii)  demand and energy savings and the methods and assumptions used to estimate the savings;

            (iv)  measures of the cost-effectiveness of the program, including avoided costs, and the techniques used to estimate those costs;

            (v)  annualized cost of saved energy and capacity and the techniques used to estimate those costs; and

            (vi) the methods used to estimate those costs; and

            (vii)  estimates of the net economic benefit of the programs. 

            (g) An assessment of the A resource adequacy assessment based on of existing resources and a description of the nature of the need for additional resources to achieve industry-standard adequacy standards or reserve margin requirements. The plan must completely and thoroughly describe the method(s) and assumptions used in the assessment, including the basis for the adequacy standard or reserve margin requirement and computer modeling and model validation procedures. The assessment should must document energy and capacity deficits, and their duration, frequency, and timing, given the energy and demand forecasts in (b) and resource capabilities in (d) and (f). In addition, the assessment should must document energy and capacity deficits for scenarios that involve higher and lower forecasts of energy and demand requirements; alternative energy and demand load profiles; and alternative performance levels for existing resources to account for the effects of, among other things, extreme weather events; demand-side and distribution-side resources; electrification; and price response

            (h) A description of a wide range of plausibly cost-effective resources that could be acquired to satisfy the need for additional resources identified in the results of the resource adequacy assessment in (g), including those that may become available through transmission system investments that enhance access to broader markets for power resources. The description should shall include the electricity generating or load serving capabilities and characteristics of the resources including the technology,; size,; service of life or contract length,; performance attributes,; costs including estimates of potential fuel delivery infrastructure and transmission system interconnection and network upgrade costs, and tax credits; and environmental impacts including water and land use and emissions. The description must explain the method(s) and assumptions used to identify potential resources and define their costs, generation or load serving capabilities, and other attributes. The description may be in table form with accompanying explanatory text, as necessary.

            (i) An evaluation of the full range of cost-effective means of combining the resources in (h) with the continued or discontinued operation of existing resources to satisfy the need for additional resources identified in (g) at the lowest long-term total cost. The evaluation must consider a broad range of future customer electricity demand and energy requirements and risks related to uncertainty about future loads, resource costs and performance, and changes in public policy and environmental regulations.  The evaluation must be designed to allow for a comparison of the long-term total costs and risks of acquiring alternative resources, or combinations of resources, to address the need identified in (g). The evaluation must include at least two scenarios that rely on increased renewable energy resources and demand-side resources pursuant to 69-3-1204(2)(a)(vi), MCA. The plan must completely and thoroughly describe the results of the evaluation and document and justify the method(s) and assumptions used in the evaluation, including method(s) and assumptions used to determine cost-effectiveness and computer modeling and model validation procedures.

            (j) For computer modeling used to perform the evaluation in (i):

            (i) a thorough description of the basic design and purpose of the model;

            (ii) a thorough description of the inputs and how the model uses inputs to produce outputs;

            (iii)  a thorough description of the decisions that were informed by the modeling and questions that were examined or answered by the modeling;

            (iv)  sufficient information on modeling inputs and outputs to reasonably permit alternative modeling in another program; and

(v)  sufficient explanation of the modeling results to enable the commission and stakeholders to understand the results.

            (j) (k) A description of the utility's plan for demand-side resource acquisition over the planning period, to the extent such resources are not directly included in the evaluation in (i). The description should must include the utility's assessment of the cost-effective demand-side resource potential on its system, including the method(s) and assumptions used to determine cost-effectiveness.

            (k) (l) A description of the advisory committee required in 69-3-1208, MCA, and a complete and thorough documentation of how the utility designated members and engaged the advisory committee to review and evaluate technical, economic, and policy issues related to the utility's system and the planning process, including all substantial recommendations of the advisory committee and the utility's responses, and a copy of the work plan required in [NEW RULE IV].

            (l) (m) A description of the public meetings conducted pursuant to 69-3-1205(1), MCA, including a summary of comments, concerns, or other input received and how they were considered the utility responded.

            (m) (n) A description of the comments received on the draft plan published pursuant to [NEW RULE IV] and how they were considered, including a thorough description of modifications made to the draft plan in response to the comments or the reasons for making no modifications.

            (n) (o) A near-term action plan describing the steps the utility intends to take based on the results and conclusions of the planning process, including the evaluations in this rule. The action plan must describe the process the utility intends to use to acquire any resources or resource types, including the use of competitive solicitations.

            (o) (p) A description of how information about the mix of resources used to provide the demand and energy requirements of customers will be disseminated to them, including information about emissions and other environmental impacts, using itemized labeling, reporting, or other mechanisms as appropriate.

            (2) Plans that do not satisfy the requirements of this rule and 69-3-1204(2)(b), MCA will be deemed deficient and returned to the utility pursuant to 69-3-1204(3), MCA.


AUTH:  69-3-1204, MCA

IMP:  69-3-1204, 69-3-1205, 69-3-1206, 69-3-1207, 69-3-1208, 69-3-1209, MCA


            NEW RULE IV PLANNING PROCESS (1) A utility shall designate and engage with an advisory committee according to 69-3-1208, MCA. The utility shall meet with the advisory committee on a regular basis as it prepares resource plans. Utilities are encouraged to shall open meetings with the advisory committee to the public whenever possible, but may hold private close meetings or portions of meetings when proprietary information is discussed or when necessary to enable the utility to obtain from the committee to provide a more complete review, evaluation, or recommendation. A utility should shall engage with the committee before deciding to close a meeting to the public. 

            (2) In addition to the advisory committee, a utility should shall engage stakeholders and the public during the process of preparing a resource plan. A utility should must publicly notice engagement events at least 14 days in advance and provide meeting materials in advance to the greatest extent possible. A utility should shall present to stakeholders in a transparent, understandable manner the results of completed steps in the planning process and plans for subsequent steps and should shall provide an opportunity to comment on or request items to be addressed in a plan. A utility may combine meetings with the public, stakeholders, and the advisory committee. 

            (3) A utility should shall engage a broad cross-section of its customers (based on demographic, geographic, and service classification characteristics), including representatives of customer segments with low, moderate, and fixed incomes and highly impacted communities, on issues related to future service and resources that may be of interest to non-experts.

            (4) At the start of each planning cycle, a utility should shall engage with the advisory committee and stakeholders to develop a work plan and timeline, including the frequency of meetings with the advisory committee, for completing the assessments and preparing plan contents required in [NEW RULE III].  The work plan must include a structured process for submission of written inquiries and comments to the utility during the planning process and written responses by the utility.  The work plan shall also address procedures for access by the advisory committee to the utility's planning model during the planning process.  

            (5) A utility shall publish a draft of its resource plan at least 45 70 days before filing the resource plan with the commission and accept comments on the draft resource plan for at least 30 55 days.

            (6)  A utility shall file a resource plan every three years.


AUTH:  69-3-1204, MCA

IMP:  69-3-1204, 69-3-1205, 69-3-1208, MCA


            NEW RULE V RESOURCE PROCUREMENT (1)  A utility's resource procurement processes should shall be guided by the policy in 69-3-1202, MCA, input from the public and the advisory committee provided for in 69-3-1208, MCA, and comments of the commission on the utility's most recent resource plan.

            (2)  Utilities shall use transparent, independently administered Ccompetitive solicitations should be considered the preferred method of acquiring to acquire needed resources whenever practicable, subject to 69-3-1207, MCA, and the Commission's rules. Utilities shall document decisions regarding the types of procurement processes used for later submission in applications for rate recovery where the prudence of procurement processes and resource decisions is examined. 

            (2) (3) A utility shall notify the commission of a decision to issue a competitive solicitation. The notice shall precede release of a draft of the solicitation by at least 20 days. Before issuing the solicitation, the utility shall submit a draft of the solicitation to the commission in accordance with 69-3-1207, MCA, with a thorough description of the input and recommendations of its the advisory committee regarding the solicitation process and how the utility modified the solicitation process in response to the advisory committee's input and recommendations or, alternatively, the basis for not modifying the process.  Upon notification of a utility's intent to issue a solicitation, the commission will open a docket for purposes of receiving the draft solicitation and accepting public comment on the draft solicitation.  The commission shall provide notice to the public of the receipt of the draft solicitation and provide 45 days for interested persons to file written comments.  The utility shall not issue the final solicitation until at least 45 70 days after submitting the draft solicitation. Upon issuing the final solicitation, the utility shall concurrently submit the solicitation to the commission in the docket assigned to the draft solicitation.

(4)  A utility shall provide all proposed and final scoring criteria and metrics in the draft and final competitive solicitations filed with the Commission.

            (3) (5) Utilities should shall consider the usefulness of competitive solicitations for identifying and acquiring demand-side and distribution-side resources, but should also leverage their unique knowledge of their customers' demand characteristics to evaluate cost-effective resource potential and design programs for its acquisition. 


AUTH:  69-3-1204, MCA

IMP:  69-3-1204, 69-3-1205, 69-3-1207, 69-3-1208, 69-3-1209, MCA


            NEW RULE VI GUIDELINES REQUIREMENTS FOR COMPETITIVE SOLICITATIONS (1)  A competitive solicitation issued by a utility shall treat similarly situated bidders similarly and fairly, use understandable processes, and result in decisions and outcomes that are transparent and understandable to bidders, stakeholders, and the commission.

            (1) (2) A competitive solicitation issued by a utility shall should contain:

            (a) specific minimum bidder requirements for credit and capability;

            (b) standard form contracts or contract provisions the utility intends to use;

            (c) specific explanations of bidders' ability to negotiate mutually agreeable final contract terms that are different from the standard form contracts;

            (d) clear and complete descriptions of the resources, products, and services the utility seeks to acquire;

            (e) a description of how the solicitation aligns with a resource need shown by the utility's most recent resource plan or a subsequently identified need resulting from a change in circumstances;

            (f) specific bid evaluation and bidder qualification standards and criteria including a sample evaluation rubric that quantifies, where possible, the weight the utility will give each criterion during the bid ranking procedure; and

            (g) clear and complete descriptions of how the utility will share information about bid scores, including what information about the bid scores and bid ranking will be provided to bidders and when and how it will be provided.

            (2) (3) A utility's process for evaluating offers or bids in competitive solicitations should shall:

            (a) apply bidder qualification standards and bid evaluation criteria fairly and consistently;

            (b) allow all bidders to adjust their bids in the event the utility or third-party administrator revises any evaluation standards or criteria;

            (c) apply a transparent and systematic rating methodology to objectively rank bids with respect to price and, as appropriate, non-price attributes factorsNon-price factors must be objectively quantifiable where practicable.  The rating methodology should shall be based on information and analyses from a utility's most recent resource plan, any commission comments on the plan, input from the advisory committee, public comments on the utility's draft solicitation, if applicable input from a third-party administrator, and industry best practices;

            (d) use the following approach to develop price and non-price scores:

(i)  price scores must be based on the prices submitted by bidders and calculated using units that are appropriate for the resources, products, or services sought and technologies expected to be employed in responsive bids.  A third-party administrator may adjust price scores on review of information submitted by bidders;

(ii)  non-price scores must, when practicable, primarily relate to resource characteristics identified in the utility's most recent resource plan or supplement to the plan and may be based on conformance to standard form contracts.  Non-price scoring criteria must be based on a clear, objective rubric that reasonably enables bidders to self-score;

(iii)  non-price score criteria that seek to identify minimum thresholds for a successful bid and that may readily be converted into minimum bidder requirements must be converted into minimum bidder requirements;

(iv)  scoring criteria may not be based on renewal or ownership options, except insofar as these options affect costs, revenues, benefits, or prices.  Any criteria based on renewal or ownership options must be explained in sufficient detail in the solicitation to allow for public comment and Commission review of the justification for the proposed criteria;

            (d) (e) document subjective judgments of the utility or the third-party administrator regarding bid scoring and ranking with sufficient detail to enable the utility to demonstrate in a transparent, understandable manner the decision-making process in subsequent regulatory proceedings involving rate recovery;

            (e) (f) identify a shortlist of offers from bidders with which the utility will pursue contract negotiations. Due diligence regarding bidder qualifications, bidder credit worthiness and experience, and project feasibility should shall be completed before selecting an offer for the shortlist. A bidder shall should not be informed that its offer is being considered for the shortlist while the utility is performing due diligence. If any bidders on the shortlist are allowed to refresh or supplement their bids in any way, all bidders on the shortlist should shall be allowed to do so;

(g)  conduct and incorporate into the selection of a final short list a sensitivity analysis of bid rankings to evaluate the degree to which the rankings are sensitive to:

(i)  changes in non-price scores; and

(ii)  changes in assumptions used to compare bids or portfolios of bids, such as assumptions used to extend shorter bids for comparison with longer bids, or assumptions used to compare smaller bids or portfolios with larger ones;

            (f) (h) prevent the utility or bidders from reassigning or "flipping" offers from the original bidding entity to another entity;

            (g) (i) prevent public disclosure of information related to individual bids, including price, before the solicitation process is complete and contracts with the winning bidder(s) have been executed; and

            (h) (j) facilitate public disclosure of information about the solicitation that is not confidential as defined in ARM 38.2.5001.

            (3) (4) A utility shall obtain and consider input from the advisory committee regarding the appropriate use and selection of a third-party administrator in a competitive solicitation process, including whether the third-party administrator should be selected through a competitive solicitation.  When using a third-party administrator in the competitive solicitation process, a utility shall should:

            (a) obtain input from its advisory committee and stakeholders regarding the appropriate use and selection of a third-party administrator, including whether a third-party administrator should be selected through a competitive process;  

(b) (a) consult with the third-party administrator on preparation of the solicitation. The third-party administrator should submit an assessment of the solicitation in the docket initiated in [NEW RULE V] concurrent with the utility's submission of the final solicitation;

            (c) (b) empower the third-party administrator to oversee the solicitation process to ensure that it is conducted fairly, transparently, and objectively. The utility is responsible for engaging the services of a third-party administrator and for all fees and expenses associated therewith. The utility may request recovery of fees and expenses associated with engaging a third-party administrator in customer rates; and

            (d) (c) empower the third-party administrator to:

            (i)  assess the reasonableness of bidder qualification and bid evaluation and scoring criteria;

            (ii)  evaluate bids;

            (iii)  select the initial shortlist; and

            (iv) assess the reasonableness of the utility's final bid selection(s).

            (4) (5) If a competitive solicitation allows includes bids by the utility or an affiliate of the utility, or bids that may result in a resource owned by the utility, the process must be administered by an independent a third-party administrator.  The third-party administrator must open, consider, and independently evaluate, and score bids received in the solicitation, and score those bids and all or a sample of the remaining bids and assess the unique risks and advantages of utility-owned resource options compared to contractual alternatives considering the following factors:

            (a) potential for construction delays and cost over-runs (considering contractual guarantees, cost and prudence of guarantees, remaining exposure to ratepayers for cost over-runs, and potential benefits of cost under-runs);

            (b)  projected forced outage rates;

            (c) projected end effect values;

            (d) projected emissions costs;

            (e) projected operation and maintenance costs;

            (f) projected capital additions costs; and

            (g) projected performance regarding output, heat rate, and power curve.

            (9) (6)  A utility shall inquire and determine whether a bidder is an affiliate or will contract with any affiliate. When an affiliate of a utility submits an offer in the utility's competitive solicitation, the following requirements shall be incorporated into the evaluation process:

            (a) Information shall not be provided to an affiliate regarding bid evaluation criteria, bidder qualification criteria, due diligence, or any other relevant resource procurement information unless the same information is simultaneously provided to all other prospective bidders.

            (b) Any individual who participates in the development of the solicitation or the evaluation or scoring of bids on behalf of the utility shall not be allowed to participate in the preparation of any offer by an affiliate or to discuss the solicitation process with an affiliate or its representatives in a non-public setting.

            (c) A utility or third-party administrator shall not disclose the contents or results of a solicitation, including information about competing bids, to personnel involved in developing an offer by an affiliate unless such information has been disclosed to the public. Protections against improper disclosure of solicitation information shall be explained in solicitation documents.

            (10) (7)  If a utility acquires resources involving affiliate transactions it shall be subject to the following filing requirements in any subsequent application regarding cost recovery under 69-3-301 through 69-3-310, MCA:

            (a) a demonstration that the utility has not subordinated its service obligations in favor of an affiliate;

            (b) a demonstration that all costs associated with any affiliate transactions are just and reasonable and in the public interest based on a lower of cost or market standard applied at the time of contract execution;

            (c) a demonstration that costs and revenues are accurately and properly segregated between regulated and non-regulated affiliated entities;

            (d) an affirmation that books of account and related records of any affiliate transacting business with the utility shall be available for audit and review by the commission. As reasonable and necessary and when lawful, the commission will protect affiliate information from public disclosure; and

            (e) proof that a code of conduct has been implemented to guide management and other employees regarding standards for day-to-day business activities with affiliates and to guard against self-dealing, gaming, and resulting subsidies.

            (5) (8)  A third-party administrator must file a closing report in the docket opened in [NEW RULE V] after the utility has determined a final shortlist. The closing report must include an overall assessment of the competitive solicitation process including whether selected resources achieve the objective of minimizing costs to customers, considering risks, and whether the process was fair to all bidders. 

            (6) (9) The consumer counsel should consider the following guidelines when it decides to engage an independent monitor pursuant to 69-3-1207(4), MCA:

            (a)  notify the commission as soon as practicable following notice by a utility of a decision to issue competitive solicitation if the consumer counsel intends to retain an independent monitor; and

            (b) provide information needed and requested by the commission to establish the process by which the commission will charge a fee to the utility to pay costs incurred by the consumer counsel related to the independent monitor.

            (7) (10) When the consumer counsel engages an independent monitor the utility and the third-party administrator shall allow access by the independent monitor to all information related to the solicitation and the evaluation of offers. 

            (8) (11) An independent monitor may file comments addressing the items in 69-3-1207(4)(c), MCA and/or prepare and file a closing report pursuant to 69-3-1207(4)(c)(iv) in the docket initiated in [NEW RULE V].

            (11) (12) When a utility acquires resources by means other than a competitive solicitation, it should shall thoroughly document the alternative acquisition process, including the assumptions and methods used to assess cost-effectiveness and all factors considered in, and the rationale for, its decision not to use a competitive solicitation.


AUTH: 69-3-1204, MCA

IMP:  69-3-1204, 69-3-1205, 69-3-1207, 69-3-1208, 69-3-1209, MCA


The statement of reasonable necessity is being amended as follows, new matter underlined, deleted matter interlined:


REASON: In 2019, the Montana Legislature adopted House Bill (HB) 597, which was later codified through amendments to 69-3-1201 through 69-3-1209, MCA and 69-8-421, MCA, and repeal of 69-8-419 and 69-8-420, MCA. HB 597 enacted changes to the utility long-term planning process and added requirements for competitive procurement processes for new electric resources.  HB 597 articulates a clear policy of encouraging utilities to acquire resources using competitive solicitation processes. Based on the state's policy and the commission's duty to set just and reasonable rates, it is reasonably necessary to create a utility competitive solicitation process that, when used, must involve robust competition and fair and objective analysis of bids to produce lower costs and more efficient rates for consumers and ensure that procurement processes and outcomes are in service of the public interest.  To implement these changes, the agency proposes several new rules that draw concepts from its existing rules found at ARM Title 38, chapter 5, subchapters 20 and 82 and update the resource planning process to reflect the Legislature's directive to the agency. These rules replace, in whole or in part, existing resource planning rules in ARM Title 38, chapter 5, subchapters 20 and 82.


NEW RULES I through VI are necessary to combine preexisting resource planning rules in ARM Title 38, chapter 5, subchapters 20 and 82 in an efficient and orderly manner and to add clarity and remove unnecessary statements from the rules.


NEW RULE I Goal and Policy


This new rule replaces the Goal and Policy rule in ARM 38.5.2001, to ensure clarity and understanding among utilities, stakeholders, and the public.


NEW RULE II Definitions


New Rule II replaces the definitions rule in ARM 38.5.2002 and adds definitions for the terms "adequate," "assessment," "cost," "cost-effective," "qualifying facility," "long-term," "affiliate," and "reliable." These terms are used in the remainder of the rules and the addition of the new definitions will ensure clear, consistent understanding among utilities, stakeholders, and the public.


NEW RULE III Plan Contents


NEW RULE III is proposed to implement requirements in 69-3-1204(1) and (2), MCA, regarding certain resource plan content and time frames for the filing of resource plans. This rule implements procedures the agency must follow to review utility plans, including publishing copies, providing for public comment, and holding public meetings as required by 69-3-1204(5), MCA, and establishes demand-side management reporting requirements required by 69-3-1209, MCA. The new rule is proposed to implement the requirements for utilities to explain, justify, and document the data, assumptions, methodologies, models, determinants, and other inputs used in preparing plans according to 69-3-1204(2)(b), MCA, and the requirement that utilities hold public meetings as they prepare plans according to 69-3-1205(1), MCA. This rule is necessary to ensure that plans utilities submit contain sufficient information to allow the commission, stakeholders, and the public to evaluate compliance with statutory objectives and the reasonableness of the utilities' planning methods, subjective judgments, and resource acquisition strategies.


NEW RULE IV Planning Process


NEW RULE IV is proposed to implement the requirement that utilities assemble and maintain a broad-based advisory committee pursuant to 69-3-1208(1), MCA, to review, evaluate, and make recommendations on matters that arise in resource planning, and to engage more broadly with stakeholders and the public. This new rule is being proposed to establish guidelines requirements for utility engagement with its advisory committee, stakeholders, and the public that are intended to balance transparency in the planning process with a utility's need for committee members to feel comfortable offering complete and professional input on technical, economic, and public policy issues regarding its electric system without binding any organizations that may employ committee members.  This new rule establishes procedures for advisory committee feedback and participation through requirements for the work plan, including a structured process for submission of written inquiries and comments to the utility during the planning process and written responses by the utility.


NEW RULE V Resource Procurement


This rule is being proposed to implement the statutory statement of policy in 69-3-1202(1)(b), MCA, to encourage utilities to acquire resources using a transparent, independently administered competitive solicitation process and implements procedures that require utilities to file all scoring criteria and metrics for the solicitation and provide advance notice of an intent to conduct a competitive solicitation so that stakeholders and the public may provide input on that process. This proposed new rule implements guidelines to ensure that demand-side resources are fully considered in the evaluation of cost-effective means of meeting service requirements pursuant to 69-3-1204, MCA.


NEW RULE VI Guidelines Requirements for Competitive Solicitations


This new rule is being proposed to provide guidelines to the Consumer Counsel in requesting, selecting, and retaining an independent monitor for a competitive solicitation process as authorized by 69-3-1205(4), MCA. This new rule proposes to specify guidelines requirements for competitive solicitations including allowing qualifying facilities and other utilities to submit bids, use of third-party administrators in certain circumstances, the role of the advisory committee in the resource planning and acquisition process, and mandatory filing by utilities of certain information related to competitive solicitations pursuant to 69-3-1207, MCA.


The proposed guidelines requirements in New Rule VI are intended to promote transparency, fairness, and objectivity in utility resource acquisition solicitation and evaluation processes, including by specifying guidelines requirements when affiliate transactions could be involved, allowing opportunities for bidders to predict how their bids will be scored on both price and non-price factors, and receiving input from the utility's advisory committee on the use and selection of a third-party administrator in a competitive solicitation process.  This new rule is proposing to implement the state's policy of encouraging utilities to acquire resources using competitive solicitation processes by requiring utilities to document alternative acquisition processes, including the assumptions and methods used to assess cost-effectiveness and all factors considered in, and the rationale for, the decision not to use a competitive solicitation.


4. The repeal of the above-stated rules as proposed and described in the original proposal remains the same.


5. Comments based on the original Notice of Proposed Adoption and Repeal will be considered by the commission, and do not need to be resubmitted in response to this Amended Notice of Proposed Adoption and Repeal. Concerned persons may submit their data, views, or arguments concerning the proposed action in writing to: Department of Public Service Regulation, 1701 Prospect Avenue, Helena, Montana, 59620-2601; telephone (406) 444-6170; fax (406) 444-7618; or e-mail to pschelp@mt.gov; and must be received no later than 5:00 p.m., November 28, 2022.


6. The Montana Consumer Counsel, 111 North Last Chance Gulch, Suite 1B, Helena, MT 59620-1703, telephone (406) 444-2771, is available and may be contacted to represent consumer interests in this matter.



/s/ Lucas Hamilton                                       /s/ James Brown                                         

Lucas Hamilton                                            James Brown

Rule Reviewer                                              President

                                                                      Montana Public Service Commission

                                                                      Department of Public Service Regulation



Certified to the Secretary of State October 25, 2022.


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