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NW Energy electric rates still among highest in region

Average monthly bill $91 for homeowners
NW Energy electric rates still among highest in region
Posted at 4:50 PM, Feb 27, 2020
and last updated 2020-02-27 19:50:56-05

As NorthWestern Energy seeks to acquire more power for its Montana customers, it’s already charging some of the highest electric rates in the region, among major utilities, an MTN News analysis shows.

As of next week, NorthWestern’s residential customers in Montana will be paying 11.6 cents per kilowatt hour (kWh) for their power – the highest rate among nine investor-owned utilities that MTN News examined in Montana, Idaho, Wyoming, Oregon and Washington.

For a home consuming 750 kWh a month, that works out to a monthly bill of $91.

The only utility in the group with a higher bill for residential customers is Portland General Electric, at $95 a month. PGE actually charges a lower per-kilowatt-hour rate than NorthWestern – 11.2 cents – but has a higher monthly flat fee for homeowners, so a PGE customer’s total bill is more.

The least expensive in the group is Idaho Power, whose residential customers pay an average of about $65 for a monthly consumption of 750 kilowatt hours. Its per-kWh rate is about 8 cents.

The only other investor-owned electric utility in Montana – Montana-Dakota Utilities – charges customers about 9.7 cents per kWh, with a monthly bill at about $78.

NorthWestern Energy, with about 370,000 customers in Montana, has had electric rates among the highest in the region for investor-owned utilities for some time.

Part of the cause stems from deregulation 20 years ago, when NorthWestern’s corporate predecessor, Montana Power Co., sold off its power plants and forced the utility to buy its power on the open market.

Since deregulation was scrapped in the mid-2000s, NorthWestern has been acquiring new power sources, leading to increases in prices. Other utilities in the region didn’t deregulate and mostly kept ownership of their power plants.

But NorthWestern officials say another reason for the relatively high price of electricity in Montana are the company’s high property taxes. Utilities in Montana pay the highest property-tax rate in the state on some of their property – and that cost is automatically passed on to ratepayers.

“In most (Montana) counties, NorthWestern will be the largest property-taxpayer,” said Deborah Singer, an account and economic development specialist for the company. “There are significantly different tax structures in the different states.”

Singer also told MTN News that NorthWestern has a big geographical area to cover with fewer customers than many other utilities in the region, so its costs per customer are higher.

“Our goal is to keep our rates more level for our customers,” she said. “Over time, rates will go up, but if you can mitigate trying to have extreme rate increases, that’s what our goal is.”

NorthWestern is planning to acquire or develop as much as 750 megawatts of new power over the next five years, to fill what it says will be a shortage of reliable electricity for its customers in the coming years.

Critics of the plan have said NorthWestern is leaning too much toward building new natural gas-fired plants, rather than potentially cheaper renewable power sources, like wind and solar, and is also ignoring possible purchases in what’s currently a low-priced wholesale market.

The company is soliciting bids from power producers and says it’s too early to tell how these acquisitions might impact customer rates.

NorthWestern also has proposed acquiring an additional share of power from the coal-fired Colstrip 4 power plant in southeastern Montana, for $1 – but it would still be charging customers for operating costs of the plant.

NorthWestern spokeswoman Jo Dee Black said the Colstrip deal shouldn’t have any impact on electric rates, one way or the other. The state Public Service Commission will decide whether to approve the deal.

NorthWestern’s electric rates for homeowners in Montana are about 2.5 percent higher than they were three years ago, in the wake of a general rate hike last year. However, its rates also are allowed to fluctuate to reflect changes in the market, where the company still buys a substantial amount of its power for customers.

MTN News’ survey of regional utilities revealed that some actually reduced their rates over the last three years – while some had slight increases.

In addition to Idaho Power, Portland General Electric and Montana-Dakota Utilities, MTN News examined the rates for Pacific Power in Oregon, Puget Sound Energy and Avista in Washington and Rocky Mountain Power in Utah and Wyoming.

Here’s a closer look at electric rates for regional utilities – and, two Montana electric co-ops:

· Flathead Electric Co-op, which has about 50,000 customers in northwestern Montana, has some of the lowest per-kWh rates in the state, because it gets most of its power from hydropower produced by the federal Bonneville Power Administration. The monthly bill for a Flathead Electric customer consuming 750 kWh is about $75.

· Yellowstone Valley Electric Co-op, with 20,000 customers in the Billings area, charges customers 11.2 cents per kWh for the first 1,000 kWh per month, but has a monthly base charge of $19. At 750 kWh, a Yellowstone customer pays $103.

· At most utilities in the region, the monthly residential bill at 750 kWh is $80 or lower, compared to NorthWestern’s $91. These same utilities also charged at least 1.5 cents less per kWh than NorthWestern.

· At 750 kWh of monthly consumption, rates at Pacific Power, Avista and Idaho Power declined slightly in the past two-and-a-half years. Rates at most of the other utilities stayed roughly the same.

· Portland General Electric and NorthWestern are the only utilities whose per-kWh rate tops 10 cents, when consumption is at 750 kWh per month.

· Some other utilities have tiered or seasonal rates, that increase during certain parts of the year or at certain levels of consumption. NorthWestern charges a flat rate that doesn’t change with consumption or the time of years.

Residential electricity rates for regional utilities as of March 1:

Utility Monthly bill per kilowatt-hour (kWh) charge
Yellowstone Valley Electric Co-op $103.22 11.2 cents
Portland General Electric (Oregon) 95.15 11.2 cents
NorthWestern Energy91.15 11.6 cents
Pacific Power (Oregon) 84.05 9.9 cents
Rocky Mtn Power (Utah) 80.08 9.9 cents
Rocky Mtn Power (Wyoming) 78.03 7.7 cents
Montana-Dakota Utilities 78.23 9.7 cents
Flathead Electric Co-op 74.14 6.8 cents
Puget Sound Energy (Western Wash.) 73.64 8.8 cents
Avista (eastern Washington) 67.75 7.8 cents
Idaho Power 65.60 8.8 cents

Total bill and per-kWh charge based on monthly consumption of 750 kWh. If utility or co-op has seasonal or tiered rates, the totals are based on weighted average.