NW Energy to ask regulators for electric, natural gas rate increases

Jonathan Ambarian

HELENA (KPAX) — NorthWestern Energy has announced it will go to Montana regulators to ask for authority to raise rates for electric and natural gas customers – about two years after they filed for their last rate review.

This week, the company officially filed a requested rate adjustment with the Montana Public Service Commission. They’re initially asking for an interim rate increase – about $2 a month for a typical residential electrical user and $5 a month for a typical natural gas user – that would take effect in October.

They’ll also propose an additional increase to take effect in 2025, bringing the total to around $9 a month for an average electrical user and $9 a month for a gas user.

Crystal Lail, NorthWestern’s chief financial officer, says inflation is part of what drove the need to raise rates. She cited rising costs for things like materials, labor and interest rates.

“A typical business, when they see their costs increase, they would adjust those prices to customers right away and give them that price signal,” she said. “We as a regulated utility have a very formal and public process to do that.”

She said another major factor has been roughly $1 billion in investments the company has made into its infrastructure. One of the most notable investments has been $300 million in the Yellowstone County Generating Station, the 175-megawatt natural-gas fired power plant near Laurel.

While the company is seeking to recover costs for YCGS, Lail said the plant will also allow them to offset some costs for customers by reducing how much they have to pay for power on the open market.

“That's a really important piece to, ultimately, affordability for our customers – having a Montana resource that is serving them at a stable price,” she said.

NorthWestern’s request for an interim rate increase says the company is seeking to raise nearly $22 million more for electric service. That includes $50 million more for base revenue requirements, $7 million more for property taxes passed through automatically, and $36 million less for power costs. The interim increase would also raise more than $21 million for natural gas service.

NorthWestern last launched a rate review in 2022 – and the PSC approved a final order in the case in October 2023. Prior to that, their last review had started in 2018 for electrical, and 2016 for natural gas.

Lail said the company is filing reviews more frequently than in the past. She said, in the current environment, leaders feel it’s a better way to avoid “rate shock” for customers.

“We know from a customer perspective that, of course, seeing your bills increase is hard, and they're dealing with costs broadly in all areas – we all have the increasing costs,” she said. “So being in more frequently, customers can plan for that impact – and hopefully those would be smaller impacts as well.”

Lail said NorthWestern takes concerns about affordability very seriously, and they encourage customers who may be struggling to pay their bills to reach out to them so they can work with them on options.

It will now be up to the PSC to schedule hearings for the proposed increases. Lail said the process for the final increase is likely to take about nine months.

NorthWestern provides electric service to about 405,000 customers in Montana and natural gas to about 212,000.