Butte, Mont. – October 3, 2016 – NorthWestern Energy has filed an application to increase its natural gas delivery service and production rates in Montana. The application, filed with the Montana Public Service Commission, also seeks to permanently place two natural-gas production properties in northcentral Montana into its rate base.
The overall increase in delivery services and production charges is 7.96 percent, or approximately $10.9 million. But the overall impact on customer bills varies by customer type. For a typical residential customer using 100 therms of natural gas, the total bill would increase from $71.06 to $75.87 per month, or $4.81 or 6.77 percent.
NorthWestern has about 190,000 natural-gas customers in Montana. Of those, about 166,071 are residential customers, with another roughly 24,000 classified as general -service customers. We provide natural gas service in 117 Montana communities.
NorthWestern Energy has made sizable investments in its Montana natural-gas transmission and distribution system in recent years, seeking to maintain safety and service reliability and comply with federal requirements. Since 2005, that investment has increased by $300 million to over $742 million today.
During that same period, a typical residential customer’s bill decreased from $106.59 in 2005 to $78.79 in 2015. That trend of bill decreases, driven primarily by declines in market prices for natural gas, continues in 2016.
With the proposed increase, NorthWestern’s rates would remain well below the national average. According to the federal Energy Information Administration, a 100-therm bill, based upon the U.S. price of natural gas delivered to residential customers, averaged $103.80 during 2015.
While customers have benefitted from bill decreases, NorthWestern is seeking the rate increase due to the increased investment in the system and the increased costs of operating, maintaining and administering a safe and reliable natural gas service across Montana.
NorthWestern last sought a natural gas rate increase in 2012. In that request, the PSC approved a stipulation that resulted in a rate of return of 7.48 percent. With its 2016 filing, NorthWestern is seeking an overall lower rate of return of 7.33 percent.
With this rate request, NorthWestern is also seeking to permanently include in its natural gas rates two gas production properties which have been part of customer rates on an interim basis for several years. The rate request reflects the actual cost of production from those two properties, which were acquired in 2012 (Bear Paw/NFR) and 2013 (South Bear Paw/Devon) and are located south of Havre, MT.
NorthWestern is also seeking interim increases in natural gas delivery rates. The requested interim revenue requirement increase is approximately $5.6 million, or 4.88 percent. Once the application is deemed complete, a decision from the PSC is expected within 270 days.
