HELENA – The state Public Service Commission has approved a new, final natural gas rate for NorthWestern Energy’s customers in Montana – a rate slightly lower than the temporary increase the PSC installed several weeks ago.

However, the final rate – which will take effect in June – will be 4.6 percent higher than the old, pre-April 1 rates for NorthWestern’s 182,000 natural gas customers, most of which are in central and western Montana.

It’s the first permanent increase since 2008 in NorthWestern’s rates for delivering natural gas. The PSC voted 4-1 last week to approve the new rates.

Company spokeswoman Claudia Rapkoch said Tuesday that after “several years of stable and even declining rates,” the company needed the increase to cover millions of dollars of investments in pipelines and other infrastructure, to maintain a safe, reliable system.

Meanwhile, the five-member commission has delayed a hearing on a separate natural gas rate increase request from Montana-Dakota Utilities, which serves about 79,000 customers in eastern Montana, including Billings.

MDU is seeking a nearly 8 percent increase for its residential customers.

The commission decided the NorthWestern rate case April 23. Details of the newly approved rates include:

• NorthWestern will get a total annual increase of $11.5 million, or about $4 million less than the company first requested last fall.

• The PSC in March approved a temporary increase of $13.2 million a year, a 5.4 percent increase, that took effect April 1. When the new, adjusted lower rates take effect in June, NorthWestern also will refund customers the difference between what they paid in April and May and the final rate.

• The final rate is an average monthly increase of $3.72 for a residential customer, compared to what customers paid before the temporary increase.

• The average monthly bill for NorthWestern gas customers will be $85.13, based on consumption of 10 dekatherms.

• The increase covers NorthWestern’s costs for delivery and storage of natural gas. It does not affect what customers pay for the actual gas. Those rates are adjusted monthly, to correspond with market prices.

The PSC’s vote last week approved a settlement among the company, the Montana Consumer Counsel and the Large Customer Group, which represents industrial consumers.

An expert for the Consumer Counsel, the state agency representing small consumers, testified in February that the annual rate increase should be only $4 million, or about one-fourth of what the company requested.

Consumer Counsel Bob Nelson said Tuesday his office later agreed with NorthWestern that the company had higher income tax costs than originally thought, and that the final settlement was within a range he felt was fair to consumers.

Reaching a settlement also avoids a possible higher rate, should the case have gone to a full hearing and allowed the PSC to decide on its own, he said.

Commissioner Roger Koopman, R-Bozeman, said while any increase is difficult for ratepayers, the increase helps the company pay for needed improvements to its infrastructure.

The only “no” vote on the increase was Commissioner Travis Kavulla, R-Great Falls. He said he felt the company had justified an increase $2 million to $3 million lower than granted by the settlement.

Commissioners Bill Gallagher of Helena, Kirk Bushman of Billings and Bob Lake of Hamilton joined Koopman in voting for the increase. All are Republicans.

The MDU case has been delayed because the Consumer Counsel has had to temporarily replace an attorney working on the case, Nelson said.

Missoulian State Bureau reporter Mike Dennison can be reached at 1-800-525-4920 or by email at mike.dennison@lee.net.

(2) comments

cmoyles
cmoyles

That will be a yearly increase of $44 for every consumer.
NW profit margins for the first quarter of this year: March 31, 2013 12.11%
NW profit margins for the last quarter of last year: Dec. 31, 2012 20.91%
NW Average profit margin for the last 5 years - 7.29%.

http://ycharts.com/companies/NWE/profit_margin

Clearly we consumers need to chip in for the failing infrastructure, a cost that has been delayed and now externalized to maximize the short term profit margin.

Just wait until NW buys the Penn, Power and Light assets... or should I say we Montanans buy them back.

walter12
walter12

Natural gas, to buy in bulk, has never been cheaper. So what gives here?

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