NorthWestern Energy residential customers will experience a $7.96 reduction in monthly electricity bills due to the Montana Public Service Commission’s adoption of a temporary rate structure. The PSC approved a 7.2% rate decrease, driven by lower natural gas prices and changes in the regional energy market benefiting electricity consumers. The PSC regulates NorthWestern Energy, Montana’s largest utility, which serves around two-thirds of the state’s electricity and natural gas consumers.
NorthWestern Energy filed a $193 million rate increase request for investments in generation, distribution, and transmission, aiming for a 10.8% return on equity and covering a rising property tax bill. The request included a “bridge rate” to recover $58 million attributed to anticipated “market benefit” of its new gas plant in Laurel. Recently, NorthWestern began utilizing cheap natural gas at 16 engines of the Yellowstone County Generating Station, feeding electricity into the grid.
The PSC denied the $58 million bridge rate, finding it exceeded the YCGS service cost by approximately $15.7 million, an overcharge to customers. Brooke Umsted, PSC rate analyst, stated, “The proposed bridge rate does not comply with generally established principles of utility rate regulation.” NorthWestern’s ability to sell power to other utilities reduces some power generation expenses reflected in customers’ bills. The rate reduction stems from a decrease in the Power Costs and Credits Adjustment Mechanism, a tracker aiding energy companies in synchronizing purchase costs with customer billing.
The PSC approved NorthWestern’s property-tax-related increase of about $7.6 million, effective in January, along with a temporary natural gas rate increase for transmission, distribution, storage, and production investments. Consequently, average consumers using 65 therms/month will see a $4.38 rise in their natural gas bills. Commissioners James Brown, Jennifer Fielder, Tony O’Donnell, and Anne Bukacek supported the interim rate structure; Randy Pinocci was absent.
PSC President James Brown assured that utility rates remain fair, acknowledging Montanans’ burden from high prices in various sectors. As the holidays approach, electricity bills will decrease, counterbalancing higher natural gas costs. The PSC, Montana Consumer Counsel, Montana Environmental Information Center, and NorthWestern’s largest customers will continue evaluating unresolved issues in the broader rate case. A possible settlement agreement may emerge by next spring.
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