Parties reach agreement in NorthWestern Energy rate case

HELENA – The Montana Public Service Commission on April 23 approved settlement agreements that resolve NorthWestern Energy’s application to increase natural gas delivery service rates.

Under stipulated terms approved on a 4-1 vote, a typical residential customer using 100 therms of natural gas would see a $3.72, or 4.57 percent, increase on monthly bills. That customer’s monthly natural gas bill would increase from $81.41 per month to $85.13.

That’s still lower than five years ago, when a residential natural gas bill averaged $158.69. A total residential natural gas bill approved in the stipulation is more than 46 percent lower than with June 2008 rates, and the agreement is $1.7 million less than interim rates effective April 1. NorthWestern is required to refund any over-collection plus interest at 10.25 percent.

As part of the stipulated agreements, the Montana Consumer Counsel, Large Customer Group and NWE agreed to a revenue increase of $11.5 million for gas delivery service. That’s about $4.2 million less than the utility requested in its general rate case filing with the PSC.

Commissioners said the settlement strikes a balance by providing the utility needed revenue to safely and reliably operate and maintain its natural gas system at a reasonable cost to ratepayers. Commissioners have instructed PSC staff to begin drafting an order formally approving the stipulations and a 9.8 percent return on equity.

Commissioner Roger Koopman, R-Bozeman, said the company is making investments he believes will improve the safety of all its gas customers, pointing to the March 5, 2009 natural gas explosion that killed one woman and destroyed several buildings in downtown Bozeman. The stipulated increase will help pay for ongoing infrastructure improvements to help prevent future disasters, he said.

Travis Kavulla, R-Great Falls, was the one commissioner who voted against the terms.

“On a line-by-line list, I went through all the issues contested in the proceeding and came up with my own personal decision on what should be included,” Kavulla told the Weekly. “The rate increase I saw as necessary would have been around $8.5-9.5 million.”

The main drivers of the rate case, Kavulla said, were on increases to operations and maintenance expenses with regard to personnel, health care cost, tax increases, plus infrastructure investments, some of which are being undertaken because of federal mandates intended to improve pipeline safety.

But even so, he said, the PSC doesn’t know the details of how the $11.5 million will be spent.

“Basically all the parties in this rate proceeding came together and said, ‘We’re not going to tell you how we arrived at this figure.’” Kavulla said. “None of us know how they got to this $11.5 million.”

A number of southwest Montana towns use NWE’s natural gas, including Bozeman, Belgrade, Big Timber, Gallatin Gateway, Whitehall and Three Forks.