A Lump of…Gas in Montanans’ Stockings
by Derek Goldman, NWEC Montana Policy and Regulatory Associate
T’was the night before Christmas and all through the house, not a creature was stirring—except in Helena, where the Montana Public Service Commission (PSC) was preparing to issue its final order in NorthWestern Energy’s application to increase Montana electric rates. Along with the Montana Environmental Information Center, Human Resource Council-District XI and the Natural Resources Defense Council, we jointly intervened in this year-and-a-half long, quasi-legal process before the PSC.
The latest rate request was largely centered around the Yellowstone County Generating Station (YCGS)—a newly-constructed, gas-fired power plant operating near Laurel. NorthWestern sought recovery in customer rates of nearly $300 million for the total cost of constructing the plant.
The lengthy process at the PSC included written and oral testimony from dozens of experts in the energy and consumer advocacy spaces. The evidence presented ultimately led the PSC staff to conclude that “NorthWestern did not evaluate the full range of potential cost-effective resource options.” Furthermore, PSC staff concluded that: “Significant deficiencies in the planning and procurement processes raise serious doubts about whether NorthWestern minimized total costs and risks for customers over the long-term. With the exception of permit litigation and related impacts associated with construction, which were outside of NorthWestern’s control, the YCGS cost overruns resulted from imprudent decisions and should not be borne by ratepayers.”
Fast-forward to Christmas Eve, when the Commission nevertheless issued a final order to allow NorthWestern to recover most of the costs associated with YCGS from its Montana electric customers. The order was issued even though NorthWestern had not yet calculated and submitted to the PSC the exact impact of the allowed costs on customers’ electric bills. At a time when the cost of just about everything is rising, this will hit hard for many low-income Montana residents and small businesses.
Since Montana law allows a regulated utility to preemptively implement a proposed rate increase while the case is still pending before the Commission, NorthWestern did just that last May. Because spring is a time when most Montanans don’t use a lot of heat or air conditioning (two of biggest end-uses of electricity), many of us may not have noticed double-digit percent rate increase on our bills at the time. Because the PSC did ultimately block at least a small portion of the Yellowstone plant’s costs in its final order, many electric customers may actually see a slight decrease in electric rates next month. But don’t be deceived: the net result of the whole process will be an estimated 12 percent residential electric rate increase above 2024 rates.
Knowing this, the Commission also ordered NorthWestern to maintain its low-income stakeholder group and to develop proposals to address energy affordability prior to filing a new rate request. The PSC ordered the utility to report progress to the Commission every six months.
Ultimately, the Yellowstone gas generation plant will emit approximately 23 million tons of carbon pollution over its expected life, and it will cost NorthWestern’s electric customers nearly a quarter of a billion dollars.
As NorthWestern enters its new resource planning cycle over the next couple of months, utility staff will be holding four public meetings in Montana. Residential and commercial electric customers who are concerned about ever-increasing utility bills, drought, wildfire and other climate change impacts should make their voices heard and demand our state’s largest utility invest in clean and affordable energy resources.
This op-ed originally appeared in The Missoulian.