NorthWestern Energy and Montana-Dakota Utilities both are making rate requests that would increase customers’ power bills — following significant rate hikes approved last year.
In August 2023, the Montana Public Service Commission approved additional revenue for MDU that meant a 9.1% increase for residential customers, although MDU wanted even more.
In October 2023, the Public Service Commission approved a settlement for NorthWestern Energy that pushed up rates 28% from August 2022 for residential customers — from $91.27 to $116.63, on average.
Both companies again have rate requests pending with regulators, and Tuesday, the Public Service Commission unanimously opted against returning $13 million from NorthWestern to customers despite an argument from the Montana Consumer Counsel.
NorthWestern Energy request
In the recent rate request, NorthWestern is asking for another $21.9 million in revenue, according to a filing with the Public Service Commission.
NorthWestern said it will have put more than $1 billion into Montana natural gas and electric businesses by the end of 2024 — including $310 million it has spent on a planned methane-fired plant in Laurel.
It’s requesting a rate review “to reflect the continued investments to serve our Montana customers.”
If approved, rates would go up on an interim basis in October 2024, and then again in April 2025, according to NorthWestern Energy.
The company outlined the potential increases as follows from July 2024:
- Electric bills for residential customers would go up $2.09 a month, or 1.9%, in October 2024 on an interim basis; compared to July 2024, they would go up $9.11, or 8.28%, in April 2025.
- Natural gas bills would go up $4.81, or 9.28%, in October 2024; compared to July 2024, they would go up $8.84, or 17.04%, in April 2025.
The $21.9 million in additional revenue comes from NorthWestern’s request for $50.6 million in base revenue requirements, $7.4 million in “flow-through” property taxes, and a $36 million decrease to power costs and credits.
Montana-Dakota Utilities request
MDU said it’s asking for another $9.4 million in annual revenue, or an overall increase of 11.1%.
“Included in this request is an infrastructure investment of approximately $43 million since the last price increase in 2021 (that case was filed in 2020),” MDU said.
It said that would amount to another $8.68 a month for the average residential customer, or another $104 annually.
MDU estimated the increases at 16.4% for residential customers, and lower increases, 0.3% to 3.8%, for other classes.
“The residential increase is higher than the other customer groups to bring residential customers closer to paying the cost to provide them service,” MDU said. “Currently the other customer groups are closer to or are paying their cost of service.”
It said the Public Service Commission has as long as nine months to act on the case.
Public Service Commission approves NorthWestern’s ‘hedging’ from 2022-23
On Tuesday, the Public Service Commission unanimously approved an order to permanently grant NorthWestern’s natural gas rate adjustments, which it had approved before on an interim basis.
The Montana Consumer Counsel had argued the PSC should disallow $13.2 million in natural gas costs that NorthWestern had poorly hedged on, or entered into advanced contracts in attempts to beat market prices.
The Consumer Counsel said the contracts resulted in costs that were “significantly greater” than market costs, “resulting in significant hedging losses.”
But NorthWestern argued it made purchases responsibly based on information that was available at the time, it only hedged 28% of its total annual supply, and it faced “exceptional volatility and uncertainty in the natural gas market at that time.”
The Public Service Commission agreed with the utility, arguing NorthWestern followed the regulations for hedging.
However, commissioners also agreed those rules are old, and they adopted an order that stated the PSC should “revisit its hedging guidelines.”
“The domestic and natural gas market has changed drastically since the guidelines were established in 2007,” said the order.
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