The state's largest utility company is now charging customers 17 percent more for electricity. It made that price bump without the approval of state regulators. Montana Free Press' Amanda Eggert sat down with MTPR's Ellis Juhlin to talk about her reporting on the change.
Ellis Juhlin: So, NorthWestern Energy first requested to increase what customers pay for power about a year ago, last July, and it's a process often referred to as a rate case where monopoly utilities like NorthWestern are required to receive approval from the Public Service Commission (PSC) to do these rate bumps. But this time is a little bit different. As you reported, NorthWestern energy is now charging customers $204 more every year for electricity, without the PSC's approval. How is the utility able to do this?
Amanda Eggert: NorthWestern is relying on a Montana law that gives regulated utility companies the ability to self-implement new rate structures if the Public Service Commission hasn't acted within nine months of receiving a rate increase request. So, that provision of Montana's law hasn't been used before, according to the utility experts that I spoke to, but NorthWestern Energy is charging ahead with it this summer. The new rate structure went into effect on May 23 and that cuts across all customer classes. So, residential, commercial and industrial customers will all be subject to this new rate for electricity.
Ellis Juhlin: We've seen NorthWestern ask for several rate increases like this over the last few years and go through several of these rate cases. Why does the company say that that is needed?
Amanda Eggert: The biggest and most obvious reason that NorthWestern Energy needs more money from its customers is that it has an expensive new gas plant online. That would be the Yellowstone County Generating Station. It cost more than $300 million to build and it's been supplying NorthWestern Energy's customers with power for almost a year now, but the company has not yet been able to incorporate that in its rate structures. And that's one big reason why it's very eager to get this rate case hearing wrapped up and to have certainty about which rate structure it can use going forward.
Ellis Juhlin: The cost of building that plant or building other infrastructure to generate power is something that's passed on to ratepayers by the utility. And I know that you spoke with the Public Service Commission in your reporting as well. What did the Commission have to say in response to NorthWestern moving forward with a rate increase prior to the rate case beginning.
Amanda Eggert: Both NorthWestern Energy and the Public Service Commission have noted that these are not necessarily permanent increases. So in other words, the commission can say, hey, this is not the right rate structure, we want to use a different lower rate structure. And if that happens, then NorthWestern will have to refund the difference to its customers with interest.
The Public Service commission said something similar, that there is an opportunity for a refund, but PSC President Brad Molnar of Laurel also noted that it's pretty unprecedented for a utility to use this Montana law to self-implement rates. So he was pretty fired up about it. He basically said that NorthWestern Energy wasn't willing to wait two weeks for the start of the rate case hearing and that this takes us into the wild West of utility regulation, where essentially there isn't utility regulation.
Ellis Juhlin: As you mentioned, we're just a few days away from the Public Service Commission hearing arguments from NorthWestern on its request to increase prices in that rate case. What will this process look like and how could that differ compared to a typical rate in light of this increase.
Amanda Eggert: Well, it's gonna take a lot of time. It's scheduled to take place over two weeks and there'll be a lot of numbers thrown about. There'll be a lot of utility and energy experts talking before commissioners during the proceeding. It's a quasi-judicial hearing, so it shares a lot in common with what you might see in the judicial branch. But really, it is a very, very technical proceeding. And each day of the hearing will open with public comment, so I expect that we'll hear some public comment from NorthWestern Energy ratepayers and from other invested parties.
Ellis Juhlin: And I'm sure that you will be paying attention to it, as will I, to break it down for our listeners and readers. So thanks so much for talking with me.
Amanda Eggert: Thanks so much for having me on.
