Montana Board Releases Final Order On NorthWestern Energy Rate Hike

Dec 24, 2019

A state board late Friday announced it will allow Montana’s largest utility to increase rates by $6.5 million-dollars.

The Montana Public Service Commission’s final order on NorthWestern Energy’s rate case allows the company to recover about $600 million annually from the company’s 370,000 Montana electric customers beginning March 1, 2020.


NorthWestern had requested almost $35 million in 2018. This past March the PSC gave initial approval to a $10.5 million rate increase, which means the company will collect about $3.7 million above the final rate increase amount. The difference will be refunded to customers with interest over a yearlong period.


The increase is based on an overall rate of return of 6.92 percent, which includes a 9.65 percent return on equity. NorthWestern’s 10 percent rate on equity for its share of Colstrip Unit 4 is not included.


The PSC also directed NorthWestern to continue its $3.2 million hazard tree removal program to reduce wildfire risks, approved the company’s E+ Green tariff settlement and approved a new pilot program designed to decouple NorthWestern’s recovery of fixed costs from its energy sales.


The PSC had previously endorsed many of the items in the 100-page final order, including denying NorthWestern’s request to create a new net-metering customer class for home rooftop solar users. The PSC cited flawed methodology and Northwestern’s failure to provide requested information.


While the document notes NorthWestern is requesting approval to buy an added 25 percent share of Colstrip power plant Unit 4, the PSC declined to tie in Colstrip-specific issues to the rate case. That includes asks like requiring regular status updates on Colstrip and transition funds.


Also not part of the final rate case order is NorthWestern’s request to charge ratepayers almost $24 million to cover costs the company incurred when it bought electricity on the open market in 2018 while Colstrip Unit 4 was shut down due to air pollution violations. A hearing will be held on that request May 18, 2020.


This is NorthWestern’s first rate case as a vertically integrated utility, though the PSC has ruled on a number of rate adjustments individually.