Montana Utility Board Reviews NorthWestern Energy Rate Increase Request

BOZEMAN, Mont. — The Montana Public Service Commission (PSC) is reviewing a request from NorthWestern Energy to incorporate approximately $246 million for its recently constructed gas plant into customers’ rates. The PSC gave tentative approval on Wednesday to begin recovering costs for the 175-megawatt Yellowstone County Generating Station, located near Laurel, starting in the new year.

NorthWestern Energy, which serves about 413,000 customers in Montana, sought to collect about $289 million for the gas plant. However, PSC members raised concerns, suggesting some costs should have been avoided. PSC rate analyst Haylee Gobert pointed out issues in NorthWestern’s planning and decision-making, stating, “The process did not adequately evaluate the full range of cost-effective resources and did not fairly manage risks.”

The project encountered significant budget overruns, reportedly exceeding $45 million, and was completed nine months behind schedule. Gobert’s colleague, Brooke Umsted, emphasized that the lack of transparency in NorthWestern’s conduct made it difficult to discern whether the company acted prudently.

Despite these findings, PSC staff suggested allowing NorthWestern to recover most of its costs plus a return on equity of 9.65%. The commission subsequently voted 4-0 to reject $43 million of the initial request, highlighting avoidable construction challenges exacerbated by the pandemic.

In public comments during the proceedings, numerous residents urged the PSC to reject the rate increase. Retired Helena resident Barbara Burkland expressed concern over recent cost-of-living increases and criticized NorthWestern’s management, stating, “People should not pay for bad business decisions.”

Public discussion also touched on the overall impact of utility rates on Montanans, many of whom feel the pinch of rising costs. PSC Vice President Jennifer Fielder directed staff to draft a final order by December 24, when a comprehensive decision will be made regarding NorthWestern’s request.