Regulators looking at steep electricity rate increase

BILLINGS — A proposed steep hike in electricity rates for 26,000 homes and businesses in eastern Montana is up for consideration by state regulators who have aired prior concerns.

Montana-Dakota Utilities is seeking a 21 percent increase to cover costs that include its share of $400 million in pollution controls at coal plants in Montana and South Dakota.

A public hearing on the company’s request before the Public Service Commission begins Tuesday at the Dawson County Courthouse in Glendive. It’s expected to last several days.

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Commissioners in December rejected an interim increase sought by MDU, saying they needed to study the matter further. A final order is due by March 25.

The increase would cost customers $14.80 per month on average and raise about $11.8 million annually for MDU.

Three experts from the Montana Consumer Counsel, which advocates for utility customers, are scheduled to testify against the proposal at the public hearing. The Consumer Counsel has said previously that MDU’s proposal was excessive and based on flawed projections of how fast its assets would lose value in coming years.

The costs cited by MDU include new pollution controls at power plants in Sidney, Montana, and Big Stone City, South Dakota; a newly constructed $77 million gas plant near Mandan, North Dakota; a $220 million wind farm in North Dakota and two small natural gas plants in Sidney.

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PSC Commissioner Kirk Bushman said the five-member panel will look closely at those projects as it considers the rate hike. Bushman said some increase is likely, but it won’t necessarily be as large as what MDU has been seeking.

“We can’t just say, ‘You can’t raise rates,’” Bushman said. “If they can show under reasonable circumstances they had to build out and invest so much in their infrastructure, by law they’re allowed to recover” those costs from customers.

When the rate increase was first announced last year, it included a fee for some customers who use their own wind or solar power. That provision was dropped under an agreement between MDU and a group known as The Alliance for Solar Choice, which intervened in the case.