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By Jim Larson
August 9, 2025
ButteNews
Northwestern Energy’s July rate reduction was largely a public relations move, a company spokesman confirmed.
Rick Edwards, Director of Key Accounts & Customer Education at NorthWestern Energy, said during an interview that the company’s decision to raise its electricity rates by 17 percent in May “created a lot of media attention and a lot of concern for customers.”
Montana Public Service Commission President Brad Molnar said after the reduction that he suspected that the move was made to “solve a communications problem.”
NWE had been able to raise the rate without PSC approval because the commission had let nine months pass without issuing a final order on the utility’s requested rate review, a move allowed by Montana law.
Public Service Commission attorney Lucas Hamilton noted that NorthWestern Energy had given the commission ample notice of its intention to act when the 9-month deadline came up. “This didn’t catch us by surprise. We had been aware of it since the case was filed,” he said in a phone interview. Hamilton also said that it is impossible to properly evaluate a rate request in nine months.
The company revisited the imposed rate by initiating a rate reduction. It was a move that was simply rubber stamped by the PSC.
NWE initiated the reduction with the state’s major electricity rate stakeholders, Edwards said. He called the new rate request, a “settled rate.”
NWE asked the Montana Public Service Commission to bring the interim rate increase down by half.
That happened at the commission’s July 1 meeting, but not after a contentious exchange between the commission's president and vice president.
During the meeting President Molnar put forth a motion that would bring the state’s electricity rates down to the level set last November, completely wiping out the utility’s rate increase.
Vice President Jennifer Fielder offered a substitute motion that concurred with NWE’s new requested rate. That rate was also supported by the commission’s chief legal council,
Fielder’s motion was carried by a vote of 3-2.
During separate interviews both Edwards and Molnar noted that the reduced rate would also mitigate the utility’s need to pay back any amount over-collected before the rate case reached a final conclusion. That payback would include ten percent interest, Edwards said. Edwards said that rate case would probably be decided sometime this fall.
Edwards said that if Molnar’s motion had been carried, the result would have been illegal.
Commissioner Molnar noted that in large part his motion was designed to stimulate discussion by the commissioners.
In its rate review request, the utility is attempting to recover $1.5 billion in capital improvements. That includes its gas-fired power plant in Laurel, MT, Edwards said.
Back in November, the commission unexpectedly lowered the rate the utility could charge, Edwards said. That decision caused a strain on NorthWestern’s finances, he confirmed.
The commission not only lowered the amount the company could charge the average customer from $110 per month to $101, it lowered the utility’s authorized rate of return. “That created an issue because they lowered the revenues we’re collecting, and we’re not getting that return on investment that we had made since the last rate review,” Edwards said.
But a video created by an organization called, “A More Perfect Union,” argues that the size of NorthWestern’s investment is the problem.
Much of the film is consumed by interviews with angry consumers and land owners, but the gist of its argument is that regulated investor-owned regulated utilities like NWE spend way more on capital improvements than they need to. They do this because although they are allowed only an “authorized rate of return,” they are allowed to recoup the cost of those improvements.. The more they spend, the more they can ask for in the form rate reimbursement, the video asserts.
The video quotes industry analyst Mark Ellis who says that the typical nine percent to ten percent capital investment by investor-owned regulated utilities is excessive and not the norm for most business models. Other businesses follow formulas that call for a five percent to six percent capital investment, Ellis said. He said that regulators are not doing a good job of balancing the interests of consumers and investors.
Ann Hedges of the Montana Environmental Information Center appears in the video as well. She says of NWE’s Yellowstone County Generation Station, "It's the most expensive type of plant you can build today. ”The utility wanted to build the plant because it's expensive and earns more money over time," she explained.
NorthWestern wants to acquire the most expensive resources to earn a greater return for its investors, she said.
In response, Edwards noted that his was a capital intensive industry, As old equipment had to be replaced, it was always at a higher cost. He also asserted that as demand for power increased, additional investment infrastructure had to be made. He added that NorthWestern paid a huge sum in property taxes, money that went back into the community.
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