Without Utility Board Approval, NorthWestern Energy Implements 17% Electricity Rate Increase

The increase comes two weeks before a two-week hearing was set to begin on the utility’s rate hike request

By Amanda Eggert and Tom Lutey, Montana Free Press

The NorthWestern Energy building in Butte. Credit: Nora Saks / Montana Public Radio

Without giving consumers a heads up, NorthWestern Energy on Friday said it will increase electricity rates for consumers by $204 a year, without review from Montana’s utility regulator.

Documents filed with Montana’s Public Service Commission indicate that rates increased $17.07 a month for NorthWestern’s typical residential customers without prior approval from regulators or notifying its customers.

NorthWestern, which provides electricity and natural gas service to roughly two-thirds of Montana residents, is relying on a little-known Montana law that allows a monopoly utility to set its own rates when the PSC fails to act on a utility-requested rate change within nine months.

NorthWestern’s latest request for a change in rates was filed in July 2024. When the clock ran down on the PSC’s time to act, the utility moved ahead with the electricity rates it initially requested.

PSC President Brad Molnar told Montana Free Press on Friday that the utility deserves some of the blame for delays in the commission’s decision-making, and Montana is entering the “wild West” in utility rates.

“[NorthWestern is] saying that there’s going to be no oversight on what [they] ask for — that is what they’re doing,” Molnar said. “What it comes down to is they want another $70 million [from customers], and they’re not willing to wait two weeks to start the process. … It is a very, very high-risk maneuver on their part.”

A hearing on NorthWestern’s rate case is scheduled to begin June 9. The commission could require a downward adjustment on rates based on the outcome of that hearing, in which case, NorthWestern customers would be refunded the difference — with interest.

“NorthWestern Energy is looking forward to the opportunity to present our case fully and transparently at the Montana PSC hearing next month,” NorthWestern spokesperson Jo Dee Black said in a text to MTFP Friday.

Gary Duncan, who has been working in utility regulation for four decades, said he isn’t aware of a Montana utility rolling out a new rate without regulatory approval before.

“I have never seen this done, not in my history. And, also, I believe that when you’re raising rates by 16.8%, the public should be noticed by the commission and by NorthWestern,” he said. “I have a vested interest in this also, because I happen to be a customer of NorthWestern, so this irritates the hell out of me.”

Molnar said the rate increase will have disproportionate impacts, hitting those reliant on electricity (as compared to natural gas) for heating and cooling, as air conditioning season begins.

“It’s going to have huge negative effects,” he said. “Many people are not going to afford their utility bills, is our concern.”

A big piece of NorthWestern’s overall rate increase is tied to the $300 million 175-megawatt gas plant near Laurel that NorthWestern fired up last fall. The rates NorthWestern proposed last year — and adopted Friday — were based on an assumption that all 18 units of the plant would be operational, and that hasn’t been the case.

“One of the issues is an overcollection for [Yellowstone County Generating Station] for units that they thought would be in service, but are not yet,” said Jenny Harbine, an Earthjustice attorney representing Montana Environmental Information Center in the rate case. “They’ve backtracked. They’ve acknowledged that their initial filing was inflated.”

Harbine said that refunds later for higher rates now “kind of puts ratepayers on this roller coaster.”