Electricity pylons (Photo by Getty Images).
Residential customers of NorthWestern Energy will be paying less on their monthly electric bills for now — even though the utility tried to “over-charge” them, according to regulatory staff.
The Montana Public Service Commission on Tuesday voted 4-0 to approve an interim order that temporarily lowers electric rates by roughly $8 a month for the typical customer and increases natural gas rates by $4.38 a month.
In a statement, PSC President Jim Brown said the rates for customers are “fair and justified.” The order commissioners approved said it also ensures NorthWestern’s financial health.
The PSC said most changes will go into effect Dec. 1.
“Going into the holiday season this year, electricity bills will be going down for NorthWestern’s electricity customers in the interim period, more than offsetting a smaller increase in their natural gas bills,” Brown said in a statement from the PSC.
The Public Service Commission took up the interim rate request as part of a larger NorthWestern Energy rate case. The company had requested a temporary increase of $1.40 on an electric bill, but the PSC approved a $7.96 decrease for the typical residential customer.
At a hearing Tuesday, members of the Public Service Commission heard again about the financial pain Montanans are experiencing buying food at the grocery store and heating their homes.
Lawyer Pamela Poon of Bozeman said she works with families who count pennies even though they work multiple jobs. Poon said she knows of children who wear down jackets indoors because of the cost of heat, and families who use their ovens for heat.
In urging the PSC to oppose the interim rate increase, Poon said many of those families don’t have much of a voice, and they may not have made time to vote, so Public Service Commissioners might not always hear them.
“So I’m here to be a loud speaker for them to say they are really suffering,” Poon said. “I hope none of you have ever had to count the pennies and have cooked flour for dinner, which is what they sometimes have.”
The Public Service Commission regulates monopoly utilities in Montana. It is made up of five members elected by district, currently all Republican.
In a report Tuesday, commissioners heard justifications for staff recommendations to sidestep some of NorthWestern’s requests in the interim adjustments.
“NorthWestern states that its current natural gas and electric rates do not provide an opportunity to recover its costs for providing services to customers,” said the order. “NorthWestern explains that it continues to invest in its electric and natural gas systems and services ‘while being impacted by higher interest rates and continued inflation, resulting in pressure on (its) credit metrics and continued under-earning.’”
But the PSC said it has “broad discretion” in approving interim rate adjustments, and it agreed with some of NorthWestern’s conclusions, but not all.
At the hearing, the PSC also heard the controversial methane-fired Yellowstone County Generating Station in Laurel is running and providing service to customers, and how it is part of the interim request.
A report from staff said NorthWestern had wanted to start billing customers for it with a “bridge rate” to decrease the lag time from its investment in the plant and ability to earn a fair return.
The order said the company argued that without this temporary bump, it would suffer financially.
However, PSC analysts found the “bridge rate” to be problematic. The Montana Environmental Information Center also had contested it.
As proposed by NorthWestern, the bridge rate, based on the market value of the plant at $58.5 million, would have resulted in a “significant over charge” to customers, said a PSC staff memo.
Additionally, NorthWestern didn’t adjust the rate when it became aware that only part of the plant would be operating, with two of 18 units not yet online, the memo said.
The staff memo also raised another concern with that dollar amount. It said NorthWestern proposed the revenue requirement for the plant to be $42.8 million, but it proposed a bridge rate that was $15.7 million more, without justification.
“In NorthWestern’s proposal, shareholders receive the entire difference between YCGS’s forecasted benefit and the (base), at the expense of ratepayers,” the memo said.
However, the order said the PSC finds it appropriate for the utility to address some costs associated with the plant in the interim increase for electric rates because it’s “currently uncompensated” for YCGS. It said the plant appears to be running and is expected to continue to operate and provide electric service to customers.
However, the order said the PSC is granting those costs only on a temporary basis, and a full “prudency” review, or a look at whether the plant is a prudent investment, will still take place with “considerable investigation.”
In its decision Tuesday, the Public Service Commission granted NorthWestern the interim rate increase it had requested for natural gas, with all present members voting yes, and Commissioner Randy Pinocci absent.
If granted in the future, the full rate request from NorthWestern would lead to an 8.28% hike in electric bills for residential customers, or $9.11. For natural gas, the full increase would be $8.84, or 17%.
Last year, the Public Service Commission approved steep rate increases for both NorthWestern Energy and Montana Dakota Utilities, despite significant pushback from members of the public.
Commissioners have argued part of their job is to ensure NorthWestern Energy stays financially healthy, although members of the public have said its top executives continue to earn, and the company continues to make profits.
In a statement after the vote Tuesday, however, Brown acknowledged the public sentiment.
“The entire commission recognizes that Montanans have been facing historically high prices for everything from housing to health care, food to insurance, diesel fuel and gasoline for the last four years,” Brown said.