SD PUC to Vote on $20M Rate Increase for NorthWestern Energy

NorthWestern Energy – a utility that serves about 700,000 customers in Montana, Nebraska, and South Dakota – has reached a stipulated settlement agreement with the South Dakota Public Utility Commission (Docket EL15-033 ) concerning NorthWestern’s pending electric rate case, the company announced on September 25.

Concurrently, NorthWestern divulged that it has completed its previously announced acquisition of the 80-megawatt (MW) Beethoven wind project located near Tripp, South Dakota., from BayWa r.e. Wind for $143 million.

The settlement agreement, which was filed on September 24, requires a majority approval by the three South Dakota Public Utility Commission (SD PUC) commissioners.

If it gets the go-ahead, NorthWestern would be allowed to increase base rates by $20.2 million annually compared to the utility’s original request of $26.5 million. However, according to NorthWestern, “There can be no assurance the commissioners will approve the settlement, which has not been agreed to by any of the other interveners in the docket.”

The settlement agreement also would place the Beethoven wind project into the company’s South Dakota rate base. As a rate-based resource, customers are anticipated to save approximately $44 million compared to the existing 20-year power purchase agreements with the U.S. subsidiary of Munich, Germany-based BayWa r.e. The Beethoven project was not submitted in the rate filing made in December; however, under the stipulated agreement the company would be allowed to collect an additional $9.0 million annually for the project.

The settlement agreement would result in an annual rate increase lower than the interim increase implemented in July 2015. NorthWestern will refund the difference between the interim rate and final approved rate through customer bills by March 2016, once known adjustments are made for the Beethoven wind project, the Big Stone air quality control system project and miscellaneous items.

Under the agreement, NorthWestern would be authorized to earn a 7.24 percent rate of return on its rate base. A hearing is currently scheduled for October 27-October 30, and the PUC is expected to make a final determination in the case by the end of the year.

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