HELENA — Montana’s largest utility defended their request to raise electric and gas rates Monday, as the state’s utility regulators consider whether to sign off on the proposal.
The Montana Public Service Commission had a full chamber Monday morning, as they opened what could be more than a weeklong hearing on NorthWestern Energy’s latest rate case.
Video of reactions on the first day of the hearing:
This hearing, originally set to begin in April, was delayed after NorthWestern agreed on a proposed settlement with some of the other parties that had intervened in the rate case. The company said in a news release that, after the settlement, their updated proposals would be for a $4.63 a month increase for a typical residential electric customer and $4.74 more a month on a typical natural gas customer’s bill.
The settlement left two major questions unresolved: How much NorthWestern should be able to charge customers to recover the costs of the Yellowstone County Generating station, a natural gas plant in Laurel; and how much money they should be able to raise to cover the potential costs of buying power on the open market.
NorthWestern’s representatives argued during Monday’s hearing that their decisions and their rate requests have been reasonable. Director of Regulatory Corporate Counsel Sarah Norcott said the company had invested around $1 billion in the last few years, including $390 million in electric generation, from upgrading hydroelectric facilities to building YCGS.
“These are not abstract numbers; they represent real improvements that help prevent outages, reduce wildfire risk, and ensure we can meet demand during Montana's coldest nights and hottest days,” she said.
Norcott also argued that, for several years, NorthWestern has regularly had to buy power during “extreme events” when the cost sometimes rose above $1,000 per megawatt-hour, so it was reasonable for the company to allocate more money to prepare for that.
The Montana Consumer Counsel, tasked with representing customers, agreed to the settlement. However, they argued the utility shouldn’t be able to pass on the $42 million they’re requesting for the construction of the Laurel plant, because building it was a risky investment.
Counsel Jason Brown said the YCGS project had seen cost overruns, and it would be up to the PSC to decide how much of that should fall on customers and how much should be covered by the company’s shareholders.
“Our position is that ratepayers should not be a backstop for utilities, that make needlessly risky and questionable decisions,” he said.
Brown said, since YCGS expanded NorthWestern’s generation capacity, they shouldn’t need as much money for possible power purchases going forward.
There are also environmental groups who intervened in the rate case and weren’t party to the settlement – led by Montana Environmental Information Center. They’ve accused NorthWestern of underselling the negative impacts of fossil fuel energy and overstating the need to projects like the Laurel plant.
Shiloh Hernandez, an attorney representing those groups, questioned NorthWestern President and CEO Brian Bird during Monday’s hearing, asking him about how projects like YCGS were affecting the company’s commitment to transition to “net zero” greenhouse gas emissions by 2050.
Bird said Monday the company is serious about working toward lower-carbon energy production, but that they have to balance that goal with the need for reliable power. He said they’re already getting 60% of their electricity for Montana from carbon-free sources.
“After 1000 megawatts of intermittent resources, we needed to have a resource that can help us serve our customers – we can dispatch it when we want it and run it when we want it,” he said. “The beauty of Yellowstone County, the beauty of Colstrip, is they are dispatchable – as long as we have people who can turn them on.”
Members of the public commenting during Monday’s hearing largely wanted the PSC to cut back NorthWestern’s proposed increase. Many cited both concerns about climate change and the impact higher rates could have on lower-income Montanans.
During the commission’s lunch break, opponents stood on the sidewalk outside, holding signs criticizing NorthWestern. About eight organizations – including Montana Conservation Voters, Northern Plains Resource Council and Montana Sierra Club – were involved with organizing the rally.
“All these organizations came together with a shared mission of just raising education and awareness and making sure that folks know how to testify, that the Public Service is hearing us, that we don't want Northwestern Energy to be holding us captive, essentially, with their rate hikes,” said Lindsay Wancour, a regional organizer with Montana Conservation Voters.
The PSC hearing is set to last up to two weeks. The commission is not expected to make an immediate decision afterwards.
This hearing comes several weeks after NorthWestern announced that it would implement a temporary rate increase on its own, citing a state law that allows utilities to self-implement a new rate if the PSC hasn’t made a decision on a rate case within nine months of it being filed.
