The drilling boom has led to a glut of domestic natural gas supply, driving prices down. Residential customers in Montana have seen their natural gas bills drop around 40 percent over the last four years.
So it was somewhat surprising this week when the five members of the Montana Public Service Commission found two-foot-tall stacks of paperwork on their desks, justification for why the state's two largest utilities, NorthWestern Energy and Montana-Dakota Utilities, should be allowed to significantly increase their natural gas rates.
Last week, NorthWestern Energy, which serves Missoula and most of western Montana, submitted to the PSC a request to boost rates by about 15 percent. For average residential customers, this would increase their monthly bill by $5.69 and earn the utility $15.7 million. Montana-Dakota Utilities, which operates in eastern Montana, is seeking a 6-percent hike, which would add $3.37 to customers' monthly bills.
State-regulated utilities must pass fluctuating natural gas prices onto their customers. What the utilities can control is what they charge for service and infrastructure. In NorthWestern Energy's case, its proposed rate increase is intended to recover the costs of recent capital investments in its natural gas system, as well as higher operation, administration and maintenance costs. "We understand that customers don't appreciate rate increases and we empathize with those customers who are struggling to make ends meet, however, everyone benefits from a safe, well-maintained natural gas system," says NorthWestern CEO and President Bob Rowe.
PSC Vice Chair Gail Gutsche, of Missoula, says it will probably be nine months before the commissioners hear testimony on the merits of the proposed increases. "We take these very seriously, and we scrutinize them, and there's nothing that says the utilities will get these rate increases just because they've asked," she says. "We'll determine whether or not they are warranted."
Meanwhile, Gutsche has a modicum of good news for local utility ratepayers: The PSC determined on Tuesday that Missoula's water utility, Mountain Water Co., overestimated by nearly $100,000 its water-pumping costs, which will result in a refund, albeit a very small one, for its customers.