Montana one of the few states that raised residential power rates, dropped all others

Colstrip Power Plant in Colstrip, Montana (Photo by Darrell Ehrlick of the Daily Montanan).

At first glance, there’s nothing necessarily unusual about Montana’s power rates.

In the most recent comparison of average electric prices to customers, the U.S. Energy Information Administration, which tracks America’s energy usage and up-to-the-minute power needs of the United States’ various grids, shows Montana rates are mostly clustered around the rates other states in the region are paying.

In the Mountain Group of states, for example, Montana’s residential rates are below the average of 14.19 cents per kilowatt hour at 12.52. The Mountain grouping of states includes Arizona, Colorado, Idaho, Nevada, New Mexico, Utah and Wyoming.

Compared with other Mountain states, its commercial rates are higher, while its industrial rates are lower.

Mostly, Montana is in the middle by average comparison, despite a 2% increase, compared with the same rates in 2023. However, an analysis by the Daily Montanan shows that Montana was one of only five states where every category of power went down, except for residential rates. That means commercial and industrial power users are paying less than they were a year ago, while residential customers are paying more.

The four other states where that is also true are Utah, Oklahoma, Arkansas and Mississippi.

The reasons for those rates differences depend largely on who you talk with.

For example, when contacted several weeks ago, a spokesperson for NorthWestern Energy, the state’s largest public utility, which is overseen by the Montana Public Service Commission, said that it was busy cleaning up a storm in Missoula and it could not respond to the questions by the Daily Montanan for at least two weeks.

However, in previous reporting, officials with the power company have argued repeatedly that they’ve had to raise residential power rates because those rates have been subsidized by larger industrial and commercial carriers.

Those are the two categories in Montana that have fallen during the same period during the last year. For example, commercial rates in Montana have fallen from 12.04 cents per kilowatt hour to 11.76, a decrease of 2.3%, and industrial rates have fallen from 8.08 cents per kilowatt hour to 6.65, a 17.7% decrease.

In the Mountain region, that means that only New Mexico and Utah have lower industrial rates, while Montana still has nearly the highest commercial rates in the region.

The Montana Consumer Counsel, which by law is tasked with defending customers’ interests in rate cases before the state’s PSC, did not respond to requests for an interview for this story.

That’s a big part of the problem, said Anne Hedges the policy director of the Montana Environmental Information Center, a long-time organization that acts as a watchdog and advocate for energy issues in the Treasure State.

“The Consumer Counsel agreed to it,” Hedges said, acknowledging that the state’s watchdog for consumers agreed to a rate settlement with NorthWestern that boosted rates for residential customers, while dropping the others. “Someone has to start representing the residential customers.”

Hedges said in repeated conversations with the Consumer Counsel and the limited staff, they have said they represent all customers, including industrial and commercial. Hedges said that may be a fair summary of state law, but there is an important difference.

“Those big guys have attorneys or can hire them,” Hedges said.

She said that NorthWestern Energy has intentionally not invested more in transmission because it keeps the supply limited in Montana. New transmission lines may open up more possibilities, including cheaper market power.

She also said that one way many utility companies have been able to cut rates is by encouraging better efficiency. In other words, other companies haven’t bought or produced more energy, they’ve cut down on demand.

“The cheapest electricity is the kind you don’t use,” she said.

Other companies invest in home energy audits, new windows and more efficient appliances. NorthWestern does energy audits and provides rebates for some purchases as well, but it has also had trouble enrolling people in programs designed to help residents who need it most.

Hedges said other power generation for NorthWestern is among the most expensive out there. For example, the energy company doesn’t have control over the price of coal or natural gas, so those costs — no matter how high — will get passed along to customers. That makes energy expensive to produce, and expensive when it doesn’t produce enough, turning to the open market or “spot” energy prices.

“They simply haven’t invested in the things that other companies have,” Hedges said.