NorthWestern still falling short in application for higher rates, says Montana PSC

Electricity pylons (Photo by Getty Images).

NorthWestern Energy still needs to cough up more information before the Montana Public Service Commission will consider its application requesting more money from customers — $156.5 million more in base revenue from just electric costs.

Tuesday, the Public Service Commission said the utility had provided additional information about its pending request for more revenue in response to a notice from the PSC earlier this month.

However, NorthWestern still hadn’t adequately explained its “cost of service” studies, or how it allocates costs among different types of customers, such as residential or businesses, regulators said at their meeting Tuesday.

In a statement after the meeting, PSC President James Brown said the commission can’t move ahead until NorthWestern complies with the law and provides more information.

“In order for the Commission to consider a rate case, the PSC requires very specific economic and business data of any monopoly utility applicant that seeks to adjust the rates they charge Montana ratepayers,” Brown said. “Compliance with these rules is essential for the PSC to do its regulatory work. To date, NorthWestern has failed to meet this critical information standard.”

In the past, different groups have argued to the Public Service Commission not only about how much additional revenue NorthWestern should receive in rate cases, but also about which classes of customer should pay.

At least a couple of parties in previous cases want to participate in the current case as well.

In its own application to intervene, Walmart said energy costs are a significant portion of its operating costs. It already argued it should be allowed to weigh in on the right rate of return for NorthWestern and also address any needed “adjustments” to cost of service studies.

A group of industrial energy customers, or the Large Customer Group, also submitted an application to intervene. That group is made up of users that include Calumet Montana Refining, REC Silicon and Stillwater Mining Co.

The PSC regulates monopoly utilities in Montana.

In NorthWestern’s last rate case, some parties argued residential customers were being saddled with paying for the bulk of the revenue increase the utility wanted, but the Large Customer Group said residential payers were still being subsidized.

Regarding the lack of detail from NorthWestern in the current application, Commissioner Randy Pinocci wanted to know if Public Service Commission staff had seen “problems like this” in other applications, or if the shortcomings with the current application were a first.

The PSC earlier identified “multiple instances” where the utility’s application fell short. In response to Pinocci, rate analyst Haylee Gobert said other dockets had seen “minor deficiencies,” but this one showed “a higher threshold of deficiency.

“So this is the first time we’ve seen this,” Gobert said.

According to NorthWestern, its request would represent an 8.3% increase in electric costs for a typical residential customer, and 17% increase in natural gas costs, although the utility is also requesting smaller interim increases effective Oct. 1.

As requested, the totals include increases in base costs, permanent once approved by the Public Service Commission, and a decrease in overall pass-through costs, which can shift on a quarterly basis.

Revenue requests from NorthWestern Energy

NorthWestern Energy is asking for the following, according to a breakdown it provided in its application:

• $156.5 million more in base revenue requirement for electric costs,
• $7.6 million more in electric property tax increases,
• $28.6 million more in base natural gas,
• $241,654 more in pass-through tax for natural gas, and
• $94.5 million less in pass-through costs for electric for the July 1 “tracker period.”

Earlier this month, commissioners declared NorthWestern’s application insufficient and called for more information.

Tuesday, in another attempt to get a complete application, the Public Service Commission voted 5-0 to declare NorthWestern Energy’s application still required more details to comply with the rules.

A similar rate case is unfolding with Montana-Dakota Utilities, although the Public Service Commission did not require additional information from MDU in a recent preliminary review.

Last month, both MDU and NorthWestern Energy filed applications for higher rates, MDU’s for natural gas.

In October 2023, the PSC unanimously approved a settlement agreement put together by NorthWestern and some other parties, including the Large Customer Group, Walmart and the Montana Consumer Counsel.

It pushed up rates by an amount then described as “historic” and “unprecedented” — some 28% for residential and 25% for small businesses compared to rates from the previous summer.