Montana’s largest utility, NorthWestern Energy, is set to recover costs for its new gas plant, totaling approximately $246 million. The Montana Public Service Commission (PSC) granted tentative approval for these costs to be included in customer rates starting next year. This comes after NorthWestern initially requested $289 million for the Yellowstone County Generating Station, a 175-megawatt facility located near Laurel.
Cost Recovery and Regulatory Oversight
The PSC expressed concerns about NorthWestern’s cost management and planning processes. During discussions, rate analyst Haylee Gobert highlighted multiple deficiencies in NorthWestern’s decision-making. She noted that the utility did not explore all cost-effective options and failed to manage risks effectively.
- NorthWestern’s project was $45 million over budget and operational nine months late.
- The PSC staff found that NorthWestern did not adequately demonstrate the project’s public interest.
Despite these issues, the PSC recommended accepting most of the cost recovery aside from some reductions. On the following day, the commission voted 4-0 to deny $43 million of NorthWestern’s original request due to avoidable cost overruns. Additionally, they rejected about $900,000 related to plant depreciation, following recommendations from the Large Customer Group.
Further Challenges and Community Response
The PSC also deliberated on including $18-$19 million of litigation-related costs in customer rates. In a 4-0 vote, they ruled that NorthWestern acted prudently concerning air quality permitting issues, despite ongoing legal challenges regarding its environmental impact.
Community members voiced their concerns over NorthWestern’s financial decisions during public comments. Many asked the commission to reject the utilities’ rate increase, emphasizing the need for relief amid rising living costs.
- Barbara Burkland from Helena highlighted the struggles of fixed-income families.
- Jack Hanson, a Billings resident and NorthWestern shareholder, emphasized the importance of oversight in preventing utilities from pursuing costly projects purely for profit.
As the PSC prepares a final order by December 24, 2023, the future of customer rates remains uncertain. The commission’s decisions will significantly affect NorthWestern’s financial strategy and its customers’ electricity costs as Montana navigates its energy future.
