HELENA — The Montana Public Service Commission (PSC) has given its approval to an agreement that will allow NorthWestern Energy to increase its base electric and natural gas rates.
On Wednesday, October 25, 2023, the PSC unanimously approved a final order in NorthWestern’s rate case, which began more than a year ago.
The order follows the provisions laid out in a settlement agreement NorthWestern reached in April with the Montana Consumer Counsel, several large business customers and federal agencies.
“The standard isn’t that we disapprove rates based on whether or not we want to,” said Commissioner James Brown, R-Dillon, the commission’s president. “Our jobs are to determine whether the rates proposed are just and reasonable.”
Under this order, NorthWestern will be allowed to adjust its rates to recover an additional $81.9 million in annual electric revenue and $18.2 million in natural gas revenue.
Those numbers are $23.2 million and $9.1 million, respectively, below what the utility had originally asked for.
The changes would increase NorthWestern’s electric revenue by just under 15% compared to when the rate case opened in August, and natural gas revenue would increase by almost 12%.
However, PSC staff said that the full impact would not be seen on customers’ bills because the commission already approved an interim rate increase last year.
They estimated the electric bill for an average residential customer using 750 kilowatt-hours a month will increase by 7.6%, or about $8. In addition, staff said the effect on customers will be further limited because of reductions from electric and natural gas supply charges.
During Wednesday’s meeting, a number of people spoke in opposition to the proposed rate changes, citing concerns about the impacts higher rates would have on Montana residents — especially those on fixed incomes.
Commissioners said they understood those concerns, but they were bound by law to follow the evidence and approve a reasonable revenue request.
“I would like to be able to say no to any cost increases,” said Commissioner Jennifer Fielder, R-Thompson Falls, the commission’s vice president. “This country has seen astounding cost increases across the board, in every way, and none of us like it. But the reality is we have to follow the law, and we have to allow utility companies that we regulate to recover their legitimate expenses.”
Some public testimony also noted that residential customers would bear a larger share of the increase than some other classes of customers.
Leaders said that’s because the utility found residential service is placing a bigger burden on the system, compared to the percentage of revenue it’s provided.
“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,” Brown said. “It's what the evidence informs us should legally happen.”
In a filing in June, NorthWestern described the settlement agreement as “a thoughtful compromise that balances customer interests with NorthWestern’s financial health while ensuring that customers continue to receive safe and reliable service.”
During Wednesday’s hearing, a number of commenters expressed concerns about NorthWestern’s development of the Yellowstone County Generating Station — a natural-gas-fired plant under construction near Laurel — because of the potential costs and the impact of continued fossil-fuel development.
PSC staff said the costs of the YCGS are not included in the settlement agreement. They said NorthWestern may ask for a one-time cost adjustment when the station goes into service, and that the commission could do a full review at that time.
Parties that didn’t join in the settlement agreement — including several environmental organizations — would be allowed to object to that filing.
