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Montana PSC Vows to Prevent ‘Rate Gouging’ As MDU Requests 21% Boost

July 15, 2015 By Cheryl Kaften

The Montana Public Service Commission (PSC) announced on July 7 that it would review a request from Montana-Dakota Utilities (MDU) for an $11.8 million – or 21.1 percent – rate increase that would affect about 26,000 gas and electric customers in the eastern part of the Big Sky State.

Specifically, the MDU said, the proposed increase for each rate class would amount to:

  • 6 percent for residential customers;
  • 8 percent for firm general customers;
  • 8 percent for small interruptible customers; and
  • 3 percent for large interruptible customers.

The five-member Public Service Commission will have about six months to decide whether to approve the increase, which spokesman Eric Sell described as “unusually steep” in an interview with the Associated Press (AP). “You can’t just have utilities set their own rates because then consumers get gouged. But you can’t have rates for consumers set too low, where [MDU] can’t invest in their business,” he said.

“The primary reasons for this request … are increased operating costs, along with increased investment in our natural gas facilities,” said the utility’s CEO Nicole Kivisto, in a formal announcement, noting, “We have seen good customer growth and increased usage, which partially offsets the increase request.”

MDU’s last general electric rate review was in 2011, when the PSC said it approved an increase of just over 6 percent. Since then, the utility said spending on its electrical operations in Montana had increased by about 60 percent.

PSC District 2 Commissioner Kirk Bushman, who represents Custer County – an area that would be affected by the higher charges – said, in a reference to the US Environmental Protection Agency’s pending Clean Power Plan regulations: “Utilities like MDU will have to … invest millions to meet new federal requirements, and I expect utilities will continue to request larger rate increases than they have in years past as a result of these costly regulations.”

In documentation submitted along with the rate request, MDU said that the money was needed to pay for its share of $400 million in pollution controls at power plants in Sidney, Montana, and Big Stone City, South Dakota; a newly constructed $77 million gas plant near Mandan, North Dakota; a $220 million wind farm in North Dakota; and two small natural gas plants in Sidney. New substations and transmission equipment also are included in the bottom line.

The company plans to split the costs among ratepayers in its neighboring service regions within North Dakota and South Dakota. “The timing of them unfortunately happened at the same time,” MDU spokesperson Mark Hanson told AP.

“We will review the request to determine if the utility took the most cost-effective approach to supply their customers with energy,” commented Public Service Commission Vice Chairman Travis Kavulla.

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