By Anne Hedges & Ian Lund
NorthWestern Energy knows no shame. As 20 million Americans fall behind on their utility bills, NorthWestern wants to substantially increase customer electricity and gas rates across Montana. In early August, it filed a rate case with the Montana Public Service Commission (PSC) in which it seeks permission to permanently increase customer rates starting in 2023 by a whopping 25% for the average electric customer and 11% for the average gas customer. (It is also requesting an immediate rate increase of 11% for electricity and 4% for gas until the PSC issues a final ruling on the amount of a permanent increase). One reason it is increasing rates is to pay for an overpriced, highly polluting methane gas plant on the banks of the Yellowstone River near Laurel (previously known as the Laurel Generating Station and now called the Yellowstone County Generating Station).
Broadly speaking, a rate case is a formal PSC process to establish the rates that consumers pay for their electricity and gas services and to assure that those rates are reasonable. Rate cases are legal proceedings in which intervening parties are allowed to ask the utility questions, request additional information, and provide expert testimony in order to help the PSC make a decision that protects customers from price gouging from monopoly utilities.
MEIC has requested to intervene in the case and will be represented by Earthjustice. We will have two primary priorities. First, we will closely scrutinize NorthWestern’s charges for the Colstrip plant to determine if the costs are prudent investments in a plant where most owners will be ready to close by late 2025. Long-term investments in such a short-term resource would be unfair to customers.
Perhaps even more importantly, NorthWestern wants to charge customers $280 million to build the 175-megawatt methane gas plant near Laurel before it gets built. NorthWestern is requesting permission to charge customers $54 million a year for 20 years – just for this plant. This would result in customers paying more than $1 billion to build the plant in addition to having to pay for annual operation, maintenance, and fuel costs! In normal utility regulation, a utility must build a plant and then ask the regulators for permission to pass those costs on to customers. Fortunately, a court found the broadly worded pre-approval law to be unconstitutional in May 2022. That meant NorthWestern would have to take the risk of building the plant and then work to convince regulators that the costs were prudent and should be passed on to customers after it is constructed and all costs are known.
NorthWestern is not one to give up on padding its pockets, though. It is now trying to find a backdoor way to charge customers for the methane gas plant before the plant is built. Instead of calling such permission “pre-approval,” it is requesting a “reliability rider” – something that has never been done. Capitalizing on fears of blackouts, NorthWestern is claiming that the only way to maintain adequate electricity supply is to build a fossil fuel plant outside of the traditional approval process. It is requesting the PSC forgo its normal approval process that requires the PSC and interested parties to review the proposal and verify that building such a plant is prudent and in the public interest.
This is an important case for the future of utility bills in Montana. If the PSC approves NorthWestern’s rate increase, Montana customers will suffer from the imprudent and evasive maneuvers of a rogue utility.
This article was published in the September 2022 issue of Down To Earth.
