If you struggle to understand the charges and formulas incorporated into power companies’ electricity and natural gas rates, you’re not alone. Utility ratemaking is a notoriously technical undertaking that even professionals working in related fields can find difficult to decipher. It’s also an important component of the “pocketbook economics” that influence Montanans’ finances, whether they’re paying their monthly power bills or budgeting for goods and services affected by swelling energy costs.
For example, when NorthWestern Energy, the state’s largest monopoly utility, last raised its rates, it estimated its residential customers’ electricity bills would climb 28% — a significant amount in a state where cold snaps and heat waves spur wallet-straining spikes in energy usage. To help Montana power consumers make sense of NorthWestern’s most recent request to raise its customers’ rates, Montana Free Press has identified four especially noteworthy elements of the proposed increase NorthWestern submitted to the Montana Public Service Commission, the board of elected officials that regulates shareholder-owned utilities, in July. 1.
NORTHWESTERN IS ASKING FOR A $193 MILLION ANNUAL RATE INCREASE FOR ELECTRICITY AND NATURAL GAS SERVICE In its application to the PSC, NorthWestern said it needs to increase the revenue it receives from electricity and natural gas customers by $193 million annually to cover the utility’s costs and earn a 10.8% return on equity.