By Roger Koopman, Stevensville
On October 30th, the Public Service Commission held its much-anticipated work session to accept or reject NorthWestern Energy’s $6.5 million electric rate increase request. This was the primary focus of a general rate case 9 years in the making. Commissioners were presented with a settlement hammered out between the utility, the Montana Consumer Counsel and several intervenors. With the option of only approving or denying — not amending — the agreement, the commission voted unanimously to authorize the retail rate hike.
While it appeared that no media release on this important news was planned by the PSC, at this commissioner’s prompting, PSC Communications Director Drew Zinecker did send out a release of sorts, albeit two days late, on the afternoon of November 1. The document was apparently the collaborative work of Zinecker and Chairman Johnson, who was the only commissioner quoted. The quote I submitted was not used, and my request to see the finished product before it went out (a standard protocol involving all commissioners) was not honored. More importantly, the established process of including regulatory and legal staff in the release preparation to assure accuracy and completeness, was not followed. As a consequence, what was sent to the media in the form of chairman quotes was factually and fundamentally false. It saddens me to say that, but there is no other way of putting it.
As a state agency, we cannot – whether through carelessness, ignorance or intent – be putting out false information to the news media. Any such misinformation must be immediately corrected. Unfortunately, my requests that a corrective release be issued have fallen on deaf ears. Therefore, I am sending this release, representing myself only, to replace fiction with fact and provide an accurate record of the news events of October 30: what happened, and what didn’t. I will be relatively brief, but I will be happy to provide more detailed information on request, or connect you with a staff person best suited to that task.
First, what did NOT happen. Contrary to the Zinecker/Johnson release, the commission DID NOT defer a decision on the proposed NWE retail electric rate increase until the day after Christmas! We made the decision to authorize the $6.5 million increase on October 30, by a unanimous vote of 5-0. Long before that meeting, the commission had already decided to split the various rate case matters into two dedicated work sessions, with a final Order combining the decisions from both meetings being written sometime before the 12/26 deadline. The second work session is currently scheduled for November 25 at 1:30 p.m.
So to represent that the primary purpose of the 10/30 session was to postpone our decision on NWE’s future retail rates and rate design (also involving revenue requirement allocations, approved rates of return, returns on equity, capital structure and a host of other regulatory rate decisions) is simply wrong. Our approval of the settlement (Stipulation) put before us is official approval of all those elements supporting the stated increase. The fact that the written Order will not be completely written until December is irrelevant. The news on the 30th was that the settlement-adjusted increase was voted on and approved. I can only apologize for those at the PSC who collaborated, apparently in secret, to put out a false story that hid from view, the important consumer-related actions of that day. I cannot explain why it happened, nor why it was never corrected.
In related actions that day, the commission passed a 10-cent increase in the monthly residential service charge, from $4.10 to $4.20, and passed the E+Green settlement, which resulted in no increase to consumers. Our rate increase action (noticed on our commission agenda as “NorthWestern Energy Application to Increase Retail Electric Utility Service Rates”) was handled by Chairman Johnson in a most unusual and unprecedented manner. Although staff and commissioners had devoted hundreds and hundreds of hours to the discovery, hearing and post-hearing process of the largest single case before us this year, Johnson did not allow ANY discussion or deliberation from commissioners on the various and complex issues addressed in the settlement before us. Instead, he called for a motion and an immediate vote. I considered this to be a very serious breach of commission duty and responsibility in this matter, but the other commissioners expressed no concern, so the vote stood. In a state of near-shock, I cast a “reluctant yes”, and strongly considered abstaining, in the absence of ANY commission discussion or debate.
Post-vote, I expressed my concerns about certain sections of the settlement, including the dramatically higher consumer rates emanating from NorthWestern’s separate regulatory rate treatment for Colstrip Unit 4, and the seemingly unfair rates of certain rate classes which resulted in the subsidization of other rate classes that weren’t paying a rate sufficient to cover their own cost of service. The unused text and quote I provided to our Communications Director follows:
No debate was permitted before the vote, but afterwards commissioner Koopman (R-Bozeman ) made clear that approving the overall Stipulation did not mean the commission necessarily supported every specific aspect embedded into the settlement. “I have personal concerns, for example, over rate design, where some rate classes may be subsidizing others, rather than each class paying their true cost of service. I also continue to believe that there were legitimate questions raised by intervenors over possible unfair charges to ratepayers in connection to Colstrip Unit 4. I believe these and other questions should be noted in our final Order.”
The $6.5 million increase is dramatically down from the $34.9 million increase proposed by NorthWestern in their original PSC filing. Since the last rate case in 2010, total generation revenue requirements have dropped significantly, but the utility’s transmission and distribution costs have increased even more. Residential customers can expect a 1.68% increase in their volumetric charges as a result of the commission’s action
Still to come in the NWE rate case are a number of challenging and contentious issues, including a Stipulation on NorthWestern’s Demand-Side Management (DSM) energy conservation program, and pending decisions on rooftop solar net metering charges and credits. NWE is proposing that a monthly “demand charge” be assessed on all new net metered customers, an idea that has met with vigorous opposition.