The increase, effective Jan. 1, comes on the heels of a proposed agreement by NorthWestern and the state Consumer Counsel to support a permanent 2 percent increase, which would be the first hike in the company's electric and gas delivery rates in nearly eight years. The state Public Service Commission, which approved the temporary rate increase on a 4-1 vote, also scheduled a February hearing on the request to make it permanent.
The 2 percent, $15 million annual increase is about two-thirds less than the amount requested by NorthWestern five months ago.
Under the increase, the average residential customer will pay about $18 more a year for electricity and $25 a year more for natural gas. NorthWestern serves 320,000 customers, most of which are in central and western Montana.
Members of Montana's Public Service Commission say that they want to take a closer look at the rate deal NorthWestern Energy has cut with consumer advocates. The PSC decided on Tuesday to seek more information on the agreement which was reached between the utility and the Montana Consumer Counsel.
Commissioner Brad Molnar, R-Laurel, was the sole commissioner Tuesday to vote against the temporary rate increase.
Molnar said later that NorthWestern already charges the highest delivery rates in the region for natural gas, and that he sees no justification for the high price or an increase.
Molnar also said there's no need to grant NorthWestern a temporary rate increase, because the commission will consider the permanent increase in a couple of months. Approving an increase now amounts to a “piecemeal” approach to rate-making, he said.
Staffers for the PSC pointed out that the Consumer Counsel agreed that the company needs the temporary increase. They also said such increases often take effect while the commission considers an overall rate-change request.
“What it is doing is providing relief for the company,” said Al Brogan, staff attorney for the PSC, noting that NorthWestern faces many inflationary costs.
The increase is in the rates that NorthWestern charges customers to deliver natural gas and electricity to their homes or businesses. Customers pay an additional price for the actual power or natural gas, tied to prices on commodities markets.
The 2 percent increase is on the total price customers pay for the energy and its delivery.
The actual increase that NorthWestern will receive for its delivery rates is higher:
4.7 percent on electricity and 5.4 percent on natural gas.
In July, NorthWestern initially asked for a $42 million increase in electric and gas rates, or 6.6 percent on electricity and about 4 percent on natural gas.
The Consumer Counsel and NorthWestern agreed to support the lower rate in a proposal filed with the PSC on Dec. 7. Consumer Counsel Bob Nelson said the agreement is good for consumers, and NorthWestern said it wanted to avoid a long, contested battle over its rate request.
If the Public Service Commission eventually adopts the agreement, the case would not be complete.
The commission, NorthWestern and others still would have to settle the “rate design,” which is how the increase will be allocated among different types of customers, such as homeowners, business and industrial consumers.
The proposed rate deal includes a promise from the company to provide to customers 21 megawatts of electricity from its Colstrip plant at below-market rates for consumers, for 6 1/2 years.
Eric Eck, chief of utility revenue requirements for the PSC, said Tuesday the below-market power is “an incredible benefit” for customers.
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