Montana Supreme Court affirms PSC’s decision to deny electric rate increase for Northwestern

Following nearly three years of litigation, a five-justice panel of the Montana Supreme Court unanimously affirmed on Sept. 27 a 2012 order issued by the Montana Public Service Commission rejecting a request by Northwestern Energy (NYSE:NWE) to increase electricity rates related to an unforeseen power plant outage.

In January 2012, just 13 after the Dave Gates Generation Station (DGGS) was acquired by NorthWestern Energy, a three-month plant outage required NorthWestern to purchase electricity from third parties, the Montana PSC noted in a Sept. 28 news release.

Even while the plant was not in service, NorthWestern was allowed to collect almost $8.3m the Gates plant costs. After accounting for all of these regular Gates costs, NorthWestern asked for an additional $1.4m in order to be made fully whole for its purchases of replacement power during the outage, which the PSC denied.

The Commission also made changes to NorthWestern’s Lost Revenue Adjustment Mechanism (LRAM), which was a program designed to compensate a utility for the revenue lost due to the utility’s energy efficiency efforts. The LRAM was ended by the Commission through a separate proceeding in October 2015.

Montana District Court Judge Brad Newman of Butte upheld the Commission’s 2012 order in August 2015.

In affirming the PSC’s order in his decision for the majority, Supreme Court Justice Jim Rice wrote that, “The Commission had substantial evidence to rely upon and it appropriately used its expertise to evaluate that evidence.”

The Dave Gates plant is a 150-MW natural gas generating facility located in Deer Lodge County, Montana.

Northwestern versus Montana PSC; DA 15-0612, 2016 MT 239.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.