Decoupling Approved For NorthWestern Energy

Apr 28, 2020

The commission that regulates energy utilities in Montana agreed to reconsider a pilot program that would allow the state’s largest utility to separate its revenue from its electricity sales.

The commission is also allowing time to figure out how the coronavirus pandemic might affect that mechanism.

At its business meeting Monday, the Public Service Commission approved NorthWestern Energy's decoupling proposal.

NorthWestern has been trying to implement decoupling since at least 2010, with various holdups on legal and regulatory fronts.

Decoupling is a rate mechanism that allows an electric utility to collect revenue regardless of how much energy it sells to consumers. Instead of relying on customer demand, NorthWestern would set a fixed cost for its services.

PSC staff member Bob Decker suggested the commission solicit public comment about how the economic effects of the coronavirus pandemic might impact NorthWestern’s implementation of the decoupling mechanism.

“We’re getting all kinds of news reports of early analyses of significant drops in electrical demand given the unprecedented changes in the economy,” Decker says.

The U.S. Energy Information Administration (EIA) reported earlier in April that grid operators have seen lower electricity demand compared to expectations. Data from various organizations also indicate a drop in electric demand globally since March.

The PSC gave staff the ok to solicit comment on how the pilot program would affect customers economically during the coronavirus pandemic.

The program will kick off in July and affect rates starting in 2021 for a four-year trial period.