It took the Montana Public Service Commission less than 10 minutes Monday to approve a $1.1 million rate reduction for Missoula’s Mountain Water Company.
PSC Chair Brad Johnson: "We will call the question. All those in favor signify by saying ‘aye’. [Four ayes]. Opposed, ‘no’: [one no]. Motion carries four to one, Commissioner Bushman dissenting.”
The vote was the follow-up to a marathon two-day rate hearing in Missoula back in early May. That hearing was meant to determine whether Mountain Water was essentially overcharging customers following the utility’s surprise sale to a Canadian firm late last year.
Public Service Commission spokesman Eric Sell:
"The unauthorized sale and transfer back in January didn't allow the commission to dive into these types of questions regarding the costs of capital of the new owner and how that should be reflected into rates.”
Witnesses for Liberty Utilities, the Canadian firm that now owns Mountain Water, testified to the PSC in early May that its rates are appropriate.
Commissioners this week determined Mountain Water’s sale to Liberty translates into lower interest rates on Mountain Water’s debts, and those savings should be passed onto local ratepayers.
"$1.1 million annually. That’s about 5.97 percent [monthly]."
The Montana Consumer Counsel hoped the PSC would approve a much steeper rate cut – something closer to $6 million.
Consumer Counsel staff represent public utility and transportation consumers in regulation cases. Eric Sell says the PSC came to a different conclusion.
"We did some calculations based off of the record in front of us, and the number that we came up with was $1.1 million in savings based off of this low-interest-rate loan that Liberty used to purchase the water system. That’s different than what the expert witness of the Consumer Counsel came up with."
Not all of the loan details are publicly available. Mountain Water argues some of that information is proprietary. The company declines to comment until it has had a chance to review the PSC’s full order.
"Actually the (PSC) is holding a work session next week to rule on a request from the Consumer Counsel that that information be made public," says Sell. "We will be revisiting this in the next week or so.”
Sell says this week’s rate ruling is about what’s fair and just for Mountain Water’s customers, not the company’s bottom line.
"The $1.1 million reduction is a savings that wasn’t there before. That should be benefiting the ratepayers and not the company. For rates to remain just and reasonable, this had to be passed on to the ratepayers. Based off of our analysis, Mountain Water is still able to recover enough to earn their return and maintain their quality of service for their customers."
This rate case has no connection to the city of Missoula’s attempt to take possession of Mountain Water through condemnation. That case is currently being considered by the Montana Supreme Court. In fact, the only Public Service Commissioner to vote against the rate reduction cited that case in his dissent. Kirk Bushman of Billings argued the rate investigation should never have commenced until the Montana Supreme Court returns its ruling.
The company will have a chance to challenge the order in district court if it so chooses.