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NorthWestern customers avoid rate increase

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Utility regulators have denied NorthWestern Energy a substantial rate increase following a plea to reconsider from Montana’s consumer advocate.

Public service commissioners voted unanimously Tuesday to dismiss NorthWestern’s attempt to add $26.4 million to the base rate it collects annually from Montana customers. That base rate is $600.8 million.

NorthWestern argued last spring the rate increase was necessary because energy prices were coming in higher than it had forecaste. The utility asked that the rate increase be made permanent and that consumers bear the entire cost.

The rate increase started showing up on customers’ bills in July with PSC approval. For the average NorthWestern Energy residential customer, the increase was $26.40 a year.

But Montana’s Consumer Counsel Jason Brown objected primarily for two reasons. First, NorthWestern and its customers normally split unexpected costs with customers picking up 90% and NorthWestern Energy paying 10%.

Secondly, that base rate isn’t usually adjusted on the fly. Usually, the base rate is set after a months-long review of rates in general. The base rate becomes the foundation for what the utility is paid, then once year unanticipated expenses are either added or subtracted to the bill. The base rate stays the same until the utility requests another review of its rates in general, which it can do at any time.

Brown reminded commissioners that one point, NorthWestern agreed to only adjusting base rates during its next general rate case.

This rate increase was one of two proposed in the last six months. Together, the increases would have added $48.60 a year to the average residential customer’s bill. Additionally, the utility has sought preapproval to add the costs of a new gas-fired power plant to customer bills. It was expected the gas plant would have added $80 a year to customer bills, but NorthWestern withdrew its application for preapproval. The cost of the gas plant will be taken up again at a later date.

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