PSC Staff Recommends MDU Rate Increase
The Montana Public Service Commission should approve a rate for Montana-Dakota Utilities that translates to a 9.1 percent increase for residential customers, or $96.09 more a year, according to a PSC staff recommendation released last week.
The recommendation, not yet scheduled as an action item for the PSC as of Monday, came on the heels of another listening session where customers, including farmers and elected officials, said the proposed rates would hurt already-beleaguered eastern Montana communities.
“They’re too profitable already — and I’m a shareholder, by the way,” said Richland County Commissioner Duane Mitchell of MDU at a public hearing in Sidney.
However, the PSC staff recommendation aligns with a settlement endorsed by MDU, the Montana Consumer Counsel, and Denbury Onshore LLC, an oil and natural gas company participating in the case.
The proposed rate increase would affect 25,600 electric customers in eastern Montana.
If approved by the PSC, the settlement would bring another $6.1 million to MDU, which had initially requested an additional $10.5 million, according to the stipulated agreement.
The PSC staff memo notes the original proposal would have cost residential customers 19.1 percent more.
“The stipulated revenue allocation for each of the customer classes is significantly lower than initially proposed by Montana-Dakota and, in some cases, by Denbury, while it is slightly higher than all of MCC’s (Montana Consumer Counsel’s) proposed allocations,” read the July 27 memo. “Staff believes this revenue allocation is reasonable given the parties’ initial positions and the facts in the overall docket.”
Currently made up of five elected Republicans, the PSC regulates monopoly utilities in Montana.
In listening sessions and letters to commissioners, many customers and elected officials have been unconvinced the proposed rate increase is just.
They also have argued MDU initially requested a significant increase in revenue only to be able to artificially lower its request later to an amount that still enriches monopoly shareholders on the backs of seniors, food producers, and people earning lower salaries.
At the Sidney hearing last week, Burt Keltner, CEO of Prairie Community Hospital in Terry, read a letter he wrote to the PSC requesting denial of the rate increase. He said eastern Montana already has been hit by COVID-19, “drastic drought” and inflation.
He shared the effects the hospital experienced during four years in power bills for one winter month and one summer month, even after installing a state-of-the-art HVAC system expected to stabilize energy costs.
In February 2019, Keltner said MDU charged the hospital $2,516.76 for 28 days of use when the temperature was roughly 13 degrees; four years later, the bill hit $4,605.17 for the same period with temps at 25 degrees.
From July 2019 to 2023, the power bill went from $831.89 to $2,368.14 for 28 days, he said. That amounts to a 185 percent increase, and he said MDU now wants another 37 percent.
In a phone call Monday, Keltner said the hospital did expand since 2019, but only minimally, for a capacity of 25 rather than 22, or a footprint of an additional 10 to 15 percent — nothing he expects would contribute to the large increase, especially with the new HVAC.
In many eastern Montana counties, he also said the small hospitals are the largest employer: “If anything affects us, it affects everything in the county.”
Additionally, he said agricultural communities have more incidents that require emergency services; if the small hospitals can’t accommodate emergency room needs, people experiencing a traumatic injury will wait 45 to 90 minutes for help instead of 15 to 45 minutes.
“Please deny that proposed rate increase and ask MDU to do what the rest of us in eastern Montana have done,” Keltner said at the meeting. “Tighten the belt and work through the current economic climate with what they have on hand.”
Commissioner Mitchell said MDU is too profitable as it is, and he didn’t appreciate it that they first asked for a 19% increase and then said, “We could settle for less.”
“Personally, I think it’s a bunch of hypocrites that’s running this company,” Mitchell said.
He also said the company didn’t have a good reason to take out coal plants despite complaints about emissions. He said “God is in control” despite “false science” around climate change, and he pointed to the book of Genesis in the Bible.
“We are here to have dominion over the Earth and everything in the Earth and on the Earth,” Mitchell said.
More than 97 percent of climate scientists around the world agree humans are causing climate change, according to a review from NASA Global Climate Change. July was the hottest month in human history, and scientists point to human emissions of greenhouse gases as the top culprit of the warming planet.
At the Sidney meeting, a customer whose full name was not audible in the recording said she earned a good salary, but she was essentially supporting three different households. She said people talk about unexpected circumstances, and she’s someone who has experienced them.
“All these unexpected things come upon you, and then one little thing like the rate increase can be financially devastating,” the customer said.
In a letter dated July 31, state Sen. Ken Bogner and Rep. Greg Kmetz — both Miles City Republicans — also expressed concerns to the PSC about the proposed rate increase. They urged commissioners to “leave no stone unturned” to provide relief to their families, friends and neighbors.
“We are regularly receiving calls and emails from our constituents expressing their dismay over the proposed increase, sharing their stories of how the ever-increasing cost of living is not sustainable for their families,” said the letter.
In their memo, the PSC staff recommend commissioners approve the stipulated agreement as filed. If approved, small businesses will see a 9.2 percent increase, large ones will see a 9.1 percent increase, and overall electric rates will go up 9.1 percent on average, according to the agreement.
PSC staff members identified in their memo instances where they believe MDU is justified in requesting more revenue, as well as times they concurred with the consumer counsel’s arguments against additional revenue.
For example, PSC staff agreed MDU should be able to recover more membership dues given MDU’s argument the benefits include “compliance with regulation, ratepayer education,” and economic growth.
On the other hand, the PSC also said it agreed with the consumer counsel in not yet charging ratepayers for the cost of a new plant, Heskett Unit IV in North Dakota. That’s because it wouldn’t be online as soon as the company had proposed, May 2023, and wouldn’t be running any earlier than July 2023, the MCC said, and PSC staff concurred.
The PSC staff memo also reiterates the factors MDU cites in arguing it merits a rate increase, including investments made, increases in operations and maintenance costs, and increases in property taxes: “The company’s net adjusted rate base has grown approximately $35.9 million, or 17 percent, since 2018.”
In January 2023, the PSC issued an interim order approving a temporary rate increase for MDU on a 3-2 vote. Commissioners Randy Pinocci and Tony O’Donnell voted against the 2.7 percent increase, and at the meeting, at least one member of the public thanked Pinocci for his opposition.
Pinocci, in turn, encouraged members of the public to continue to submit comments at 800-646-6150 or firstname.lastname@example.org.
Commissioner Annie Bukacek said she and other commissioners value public comment, “care deeply about the individual ratepayers” and want to ensure affordable, reliable energy.
She said the analysis of what it takes to “keep the lights on for you folks” requires a “sophisticated and thorough analysis.”
“It’s not a simple process, and we take it very seriously,” Bukacek said.