Montana Utility Rate Kerfuffle Would Be Resolved by HB 475

A measure(HB 475) that would require the Montana Public Service Commission to review public utilities’ rates “at any time considered to be in the public interest” moved one step closer to clearing the Legislature on February 28, according to a report by the Helena Independent Record.

“The Public Service Commission cannot determine [at this point] if NorthWestern is charging too much,” State Representative Tom Woods, (D-Bozeman) told the local news outlet. “This bill is added protection against consumers getting overcharged by monopolies.”

Indeed, in mid-February, NorthWestern Energy released a statement responding to an online petition and other consumer complaints about high utility bills. In that release, the Sioux Falls-based company stated, “As a regulated utility, our rates are thoroughly reviewed and approved by the Montana Public Service Commission with involvement from independent third parties.’

This statement was reported widely in the Montana news media – but it was not accurate, according to PSC Communications Director Chris Puyear, who countered, “Contrary to NorthWestern’s claim, the commission did not approve the latest substantial rate increase that consumers of NorthWestern are experiencing. State law allows the utility to automatically increase its rates to flow through to consumers the increase in property taxes levied by the Montana Department of Revenue. This is just what NorthWestern did.”

He added, “These rate increases went into effect on January 1 without PSC approval. The PSC had a number of questions concerning whether NorthWestern was properly allocating those increases to its retail customers. NorthWestern declined to answer those questions, instead automatically implementing the rate increase.”

House Bill 475  would enable the Public Service Commission to require utilities to justify the rates they charge, something Woods said hasn’t been done more than seven years. The bill passed a third vote in the House (80-20) and was transmitted to the State Senate on March 1 for deliberation.

“The utility needs to prove to us they are worthy of the trust we’ve placed in them,” Woods told the local newspaper.

“Is the current state of affairs hurting the ratepayers?” Woods asked. “A lot of people who have been opening their utility bills would say yes. When you’re a regulated utility it should be required that you periodically have to justify the rates,” Woods said.

Woods said NorthWestern has earned a roughly 11 percent and 10.2 percent return on equity in the last two years, which is substantially more than what the Montana Consumer Council says is reasonable. The council represents Montana consumers in rate cases. He said the utility  has been earning $10 million more than it should be because they’ve been able to avoid rate review.

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