1

PSC rejects NorthWestern’s request to increase base power costs

The increase in July that many Montana power customers saw on their bills won’t be permanent — at least just yet.

The Montana Public Service Commission denied last week NorthWestern’s application to increase its base power costs. In an earlier interim order, the commission had granted a request for a temporary adjustment, which NorthWestern had estimated meant a monthly bump of $2.28, or 2.54%, for residential customers.

PSC staff attorney Lucas Hamilton said Friday the utility can seek reconsideration as soon as the commission issues its decision to deny the request in writing. The reason for the denial was not clear but would be outlined as part of the docket.

“That will be discussed in the written order,” Hamilton said. “There was not a whole lot of discussion that took place” at the meeting.

In its original application, NorthWestern sought approval to increase its base power costs from $61.7 million to $78.7 million and another set of contracts from $76.9 million to $77.6 million.

In supplemental testimony, NorthWestern argued market prices were soaring and advocated an even higher base rate would be realistic — it calculated its base power costs had gone from $156.3 million in March to $169.8 million the first week of June. In that scenario, the average residential customer would have seen an increase of $3.93 on their monthly bill, or 4.38 percent more, some $47 a year.

The company noted the market was volatile, and different factors such as rolling blackouts in California and low snowpack were putting upward pressure on prices. NorthWestern said because it lacks its own supply, it will need to buy power on the market and be subject to those higher costs.

The Montana Consumer Counsel, though, argued the current base rate was established after NorthWestern’s own earlier proposal. The Consumer Counsel also said the new application would not have resulted in the required 90-10 percent cost sharing between the customer and shareholder for incremental supply costs.

“The remaining 10 percent will serve a critical purpose by creating some incentive to control costs until the next rate case,” the Montana Consumer Counsel wrote. “NorthWestern’s proposal here would dramatically reduce that incentive.”

If the Public Service Commission’s decision to reject the application stands following any reconsideration, Hamilton said rates will drop back down, and NorthWestern will pay interest on the over-collection from customers as directed by statute.