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Public Service Commission Approves MDU’s Rate Hike

Residential customers of Montana-Dakota Utilities will be paying nearly $100 a year more in electric rates with a 3-2 vote Tuesday, Aug. 8, by the Public Service Commission.

The vote — with Commissioners Randy Pinocci and Tony O’Donnell in opposition — follows months of protest from elected officials, residents and business leaders in eastern Montana, who said they’re already getting hit with inflation and property tax increases.

At their meeting, commissioners said they appreciated the strain on families, and even those who supported the 9.1% increase aired concerns about the deal.

However, the majority of the PSC said in their role to balance reasonable rates for customers and a fair return for the utility, they supported a settlement signed off on by the Montana Consumer Counsel and recommended by PSC staff.

“All aspects of the application as originally filed have been reduced in favor of the ratepayer as a result of the settlement before us,” said PSC president James Brown. “That’s just a fact.”

For example, MDU originally requested $10.5 million more in revenue, and the PSC approved $6.1 million instead as agreed to in the settlement.

The original request would have pushed residential rates up 19.1% instead of 9.11%.

MDU argued it needs more money to pay for rising property taxes, investments in infrastructure, and higher operating and maintenance expenditures.

As approved, residential customers will pay another $96.09 a year for electric rates, but Brown said customers can take some of their concerns about the higher bills to lawmakers.

For example, he said $2 million of the revenue increase, or roughly one third of it, goes to pay MDU’s property tax increases.

“The Montana Legislature has made a legislative decision — which is certainly within their constitutional purview — to authorize utility companies to pass the costs of property taxes directly onto ratepayers,” Brown said.

However, he also said he found one part of the agreement of concern, although overall, he believes it is in the best interests of both MDU and customers.

The portion he found troubling was a $1.2 million revenue request from MDU for amortization of its retired coal plants.

O’Donnell also pointed to that item as one reason he opposed the settlement and wanted a full hearing on the case.

A PSC staff memo notes the utility, Montana Consumer Counsel and another intervenor agreed to the dollar amount, but not a starting balance, period of time, or carrying costs.

“If you know anything about accounting, and particularly regulatory accounting, those are all very concerning factors for the commission because we’re being asked to essentially trust MDU,” Brown said.

However, he also said he believed MDU would be required to return to the PSC and justify how it had treated the retirement of its coal plants.

PSC chief legal counsel Lucas Hamilton agreed and said MDU must bring those specific issues to commissioners in a future case.

Although commissioners said they understood hardships on families, Commissioner Annie Bukacek also said the increase for residential customers amounts to $8 a month.

She equated that amount to roughly one “matinee movie without popcorn,” “two latte grandes,” and “less than the cost of a quality burger and fries.”

“We do spend money on non-essentials every month,” Bukacek said.

Bukacek said difficulties for the PSC include the complexity of ratemaking and public misunderstanding of rate cases and role of commissioners.

“Sometimes it’s necessary to increase rates in order to fulfill our goal to keep the lights on, the furnaces warm and the air conditioners doing their job,” she said.

Bukacek said public misunderstanding stemmed from reading the news and a lack of explanation from the PSC.

“Commissioners should neither rubber stamp (an agreement) nor should they pander to uninformed public pressure,” Bukacek said.

Pinocci said he opposed the settlement because he had too many questions and not enough answers. Pinocci said he disagreed with decisions MDU had made in the past, such as upgrading and then closing a plant when Montana needs energy producers.

“If we were charged money to do the upgrades, do we get that money back?” Pinocci said.

Brown, though, said commissioners might disagree with the company’s decisions. However, he said the PSC doesn’t have the authority to tell MDU to reopen a coal plant.

Also, he said it must base its own decisions on evidence in the record, and it needs to make sure the utility can continue to keep delivering services to ratepayers.

The agreement results in a 9.1% overall increase for all customers.

In a statement after the meeting, Melissa Holt of the Northern Plains Resource Council said advocates were proud of their work pushing to cut the increase but still disappointed in the PSC.

“We’ve been fighting for hardworking eastern Montanans since the day MDU’s predatory rate hike was announced, and we will continue to fight for the economic prosperity of this region,” said Holt, chair of the Dawson Resource Council, a Northern Plains affiliate based in Glendive. “We are extremely disappointed in the commissioners who sided with MDU’s executives and shareholders over the families, ag producers, and small business owners whose electricity bills will increase yet again.”

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