Montana PSC approves NorthWestern's electric rate increase - Billings Gazette

Montana PSC approves NorthWestern's electric rate increase

Rising NorthWestern Energy electricity rates will crest at 28% for Montana residential and small business customers under an agreement approved by Montana regulators Wednesday.

Electricity rates have been incrementally rising since the utility filed its general rate increase in August 2022. Base rates for natural gas customers will slightly decrease.

“I am as concerned as all of my colleagues about the amount of increase that's being allocated to the residential class. But it's not an arbitrary and capricious decision to do so on part of the commission. It's what the evidence informed us should legally happen,” said Jim Brown, of the Montana Public Service Commission.

All five members of the Republican PSC voted for the rate increase. Infrastructure investments and taxes were cited as key contributors to the rate increase. NorthWestern has 398,200 metered electric customers in Montana and 209,100 metered natural gas customers. It is the state's largest monopoly utility.

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The commission is a quasi-judicial body created by the legislature to balance a monopoly utility’s right to a fixed return on investment with the consumers’ right to a reasonable price and reliable service, though Wednesday commissioners suggested they had no obligation to look after consumers' interests if the Montana Consumer Counsel was involved in the case, which the counsel was.

The law, contrary to commissioners' insistence, doesn't require them to be as hands off as they suggested. The PSC can compel the Consumer Counsel to address issues and it can produce its own evidence when the commission thinks an issue hasn't been adequately addressed.

Customers monopoly utilities are legally recognized as “captive,” meaning they lack the free-market choice of shopping around for a better deal.

A residential customer who paid an average $91.27 a month for electricity when NorthWestern filed its rate case in August 2022, will pay an additional $304.32 a year for power under the PSC approved terms, or an additional $25.36 a month under the updated terms compared to rates at the case’s start.

The affidavit quotes a text response from Pinocci that stated in part, “For us to continue a relationship, you’re going to have to recant your testimony with the sheriff’s department.”

Much of the rate increases is already on customer bills. First, commissioners granted a 19% increase, which was added to rates in October 2022. That increase was an interim hike allowing NorthWestern Energy to collect an additional $92.2 million for electricity and gas services during the months-long rate case process. The $92.2 million is now part of the permanent increase.

Additionally, the Montana Public Service Commission approved a $13.58 million increase in tax collections at the start of 2023. That charge is also part of the 28%.

Base rates for natural gas are decreasing. This rate is the foundational charge for natural gas and decreased about $37.76 a year. However, the change can be difficult to track because gas prices are adjusted monthly to reflect market purchases by regulated Montana utilities.

Generally, market prices for natural gas have been trending downward for the past year, noted Gary Duncan, the PSC rate analyst.

Randy Pinocci and Tony O’Donnell, the only commissioners with MDU customers as constituents, both voted against the rate hike.

Prior to the commission’s rate approval, NorthWestern Energy customers spoke against the increase, which was produced through a settlement between NorthWestern, its large industrial customers, federal government agencies and the Montana Consumer Counsel.

“I’m on a fixed income. And, using NorthWestern Energy’s budget bill estimate, this budget bill estimate you have before you will increase my cost by $400 a year, plus the eventual, questionable cost of the Laurel plant,” said David Hemion, of Jefferson County.

Hemion’s reference to Laurel was directed at NorthWestern’s newly constructed gas fired power plant located west of Billings. Last estimated at $273 million, the cost of the Laurel power plant isn’t included in the rate increase approved Wednesday. NorthWestern plans to submit its first bill associated with the gas-fired power plant next year when it requests to bill customers for operating costs. Later the utility would petition to put customers on a long-term debt schedule to pay for the cost of the power plant.
Electrical equipment towers over decorative fencing around the addition to NorthWestern Energy's Rimrock Substation along Highway 318.

Commenters vented frustration that residential customers and small businesses faced the highest rate increases, while rate hikes for large businesses weren't as high. The Public Service Commission staff report on the rate increase read like NorthWestern Energy wrote it, said Anne Hedges, director of policy and government affairs for the Montana Environmental Information Center.

“I can say that it reads as if NorthWestern were allowed to write its own rate increase by negotiating with major industrial customers to pile the largest share of the rate increase on to hundreds of thousands of families and residential customers across the state,” Hedges said. “Hundreds of thousands of Montana households are already reeling from increased property tax rates, skyrocketing housing, and food costs. And now they are going to pay 28% more for their electricity bills than they did when this case began in August 2022. And that is only the beginning of the rate increases on the horizon as a result of this proposed order. NorthWestern is a mismanaged utility looking in the rearview mirror when it comes to the energy system. It has no plan to control costs and this rate case allows it to continue bilking families to enrich its shareholders.”

NorthWestern Energy isn't the only Montana utility increasing rates. In August, the PSC voted 3-2 to approve a $96 a year rate increase for electric customers of Montana Dakota Utilities, which has about 25,000 metered customers in Montana.