NorthWestern Energy, public begin debating ‘historic’ rate increases before PSC

Residents complain about power increases, while commercial customers push for agreement

By Keila Szpaller DAILY MONTANAN

Patricia Ames described herself as the “quintessential little old lady,” and she said she’s been paying an extra $100 a month on her power bill from NorthWestern Energy.

And that’s with a new and “highly efficient” furnace, she said.

Ames said she’s tired of the power company’s excuses for not investing in renewable sources that would be more affordable, including for people living on a fixed retirement income like herself.

Jim Roach of Missoula said customers are paying “sky high” housing costs, food costs and more.

“I hear every day from people that are totally pissed off with what they’re currently paying for energy,” Roach said.

Tuesday, many members of the public protested NorthWestern’s proposed rate increases, and parties in a rate case offered their opening statements in the utility’s application before the Montana Public Service Commission.

The Public Service Commission regulates monopoly utilities in the state, and it’s charged with ensuring private companies get reasonable returns and customers pay only fair rates.

NorthWestern Energy filed the application for higher rates in August 2022, and the hearing started Tuesday with public comment.

In the minority, Chris Hafer said keeping NorthWestern Energy financially sound “is a no brainer” to him.

Advocating in favor of the utility’s rate requests, Hafer told the PSC he has owned an asphalt, paving and excavating company that has done work for NorthWestern, and the power company runs a tight ship and holds people accountable.

“They employ hundreds of people and dozens of local businesses rely on them,” Hafer said. “NorthWestern is at the front of the pack when it comes to being a good corporate community partner.”

As part of the hearing, lawyers representing the utility, the Montana Consumer Counsel, Walmart, the Natural Resources Defense Council, 350 Montana, and other large parties will give statements and question experts.

Marcus Duffy, representing federal executive agencies, said his client is Malmstrom Air Force Base, and as such, his interest is in being a good steward of tax dollars.

He said every base commander has “more mission than money,” and every additional dollar that goes to a power bill is one less dollar that goes to the mission. As such, he supported an agreement proposed last week by NorthWestern and other parties including his client.

“At the end of the day, the settlement agreement avoids excessive utility costs and keeps the tax dollars focused on protecting this nation,” Duffy said.

One point of contention in the case is the power company’s request to include the Laurel gas plant in the current docket.

Some members of the public opposed the construction of the plant at all — a court case is pending — and some lawyers argued the plant, the estimated $300 million Yellowstone County Generating Station, should be part of a separate future case or isn’t being properly handled in the current case.

NorthWestern’s original rate request would have cost the average residential customer $364 a year, including a 25% increase in their electric bill. In October 2022, the PSC approved a temporary rate increase, which amounts to roughly $140.04 more a year for gas and electric.

Last week in advance of the hearing, NorthWestern and a group of parties representing larger customers such as Walmart, Malmstrom Air Force Base, Exxon, and others filed the proposed settlement on rates — but it’s a take-it-or-leave-it deal.

The Montana Consumer Counsel, which advocates for customers, also signed onto the proposed settlement.

But Jim Parker, of Missoula, questioned the legality of the proposal. The settlement hasn’t been approved, but he said the negotiations took place behind closed doors: “At least the public I don’t remember being invited.”

In his opening statement, lawyer Diego Rivas, representing the Human Resource Council District XI, the Natural Resources Defense Council, and the Northwest Energy Coalition, asked the PSC to reject that take-it-or-leave-it premise.

“The commission should not accept that framing,” Rivas said. “The commission’s job is to act in the public interest, not in the interest of the settling parties.”

Monica Tranel, on behalf of 350 Montana, asked commissioners to question NorthWestern Energy about its management decisions. She said she wondered why the PSC was in the position of having to consider the substantial increase in the first place.

“We’re dealing with a rate hike of historic and unprecedented scope,” Tranel said.

Tranel said in the past couple of cases, the company has asked and received increases in the $6 million or $7 million range, but in the current case, it asks for nearly $70 million.

“Please ask hard questions about why we’re here and why they’re asking for a rate increase so significantly larger than anything they’ve asked for before,” Tranel said.

However, NorthWestern Energy lawyer Shannon Heim said the power company is only asking for rate increases that reflect the investments it has made to provide reliable service to customers.

If the PSC approves the settlement, as NorthWestern proposed, the yearly total for an average residential customer would be $264 more compared to the original $364, according to data from NorthWestern. That figure includes the temporary increase.

“We have invested over a billion dollars in our electric and natural gas systems in Montana since our last rate review, all designed to better serve customers with reliable energy,” Heim said.

She said the evidence would demonstrate all the costs were necessary, and she also argued the case wasn’t about climate change, which some members of the public said NorthWestern has been disregarding.

“This is a rate review,” Heim said. “We are collectively discussing the financial realities of the cost incurred by NorthWestern to serve its customers.

“The docket is not an indictment or an investigation of climate change.”

If the Public Service Commission approves the proposed settlement, monthly rates would be $116.63 for electric and $65.51 for natural gas, according to the most recent estimates from NorthWestern.

In public comment, Michael Hudson, of Missoula, asked the PSC to stand with Montana families and oppose the rate increase.

He said he and his wife both have jobs that pay well, yet they are struggling. He said they are going into debt this year and tapping retirement funds — and count themselves lucky compared to many others.

With the current case, he said Montanans are staring down the barrel of the highest energy rates among neighboring states. Hudson argued the power company needs the PSC to keep close tabs on its plans, including for the Laurel plant, which he said benefits its own bottom line at the expense of customers.

“They’re like kids in a candy store,” Hudson said of NorthWestern Energy. “They need adult supervision, and that’s what I’m asking from you guys.”

A couple lawyers representing parties that did not sign the settlement agreement also questioned the way NorthWestern Energy has handled the Laurel plant.

Rivas, representing the Human Resource Council XI and other parties, said NorthWestern requested approval for the plant in various places, then withdrew requests, and eventually, included the plant in the take-it-or-leave-it settlement.

“The long and winding road that is the Yellowstone generation station is indicative of NorthWestern’s inability to chart a coherent path,” said Rivas, who argued for a process involving stakeholders instead.

Tranel, representing 350 Montana, said the gas plant does not belong in the docket at all. She said the plant is not built, it’s not permitted, and it’s not in rates, so it should legally be part of a future docket.

Arguing on behalf of large customers such as Exxon, Thorvald Nelson said the group was pleased to reach the settlement, and he said NorthWestern Energy compromised in the deal.

For example, initially, he said NorthWestern wanted an additional $91 million increase in its base rate, and his clients wanted $35.4 million instead; he said the settlement reflects $67.3 million, “slightly north of the midpoint.”

He also said the agreement reflects less of an increase to residential customers than two different studies recommended – 18.2% in the settlement instead of 21.5% in a study by NorthWestern or 26% in a study by his clients.

Nelson said that means residential customers still are being subsidized to the tune of $8 million by other classes of ratepayers.

“We believe that when you look at the evidence and you consider the arguments and the issues, the evidence will demonstrate that the settlement is in the public interest,” Nelson said.

“It will result in rates that are just and reasonable and will result in a path forward relative to the issues associated with the Yellowstone County Generating Station that makes sense for the utility and for customers in Montana.”

The hearing before the Public Service Commission continued late morning and into the afternoon following public comment and opening statements and is scheduled to continue Wednesday.