PSC Approves Gas Rate Increase For MDU Customers

Residential natural gas customers of Montana-Dakota Utilities will be paying $60.54 a month on average after the Public Service Commission approved a rate increase this week.

When MDU filed its application for an increase in spring 2024, the average residential customer paid $44.61 a month, according to data from the PSC.

The nearly 36 percent increase reflects an additional $5.29 a month approved by the PSC and additional costs in natural gas itself for $10.64, according to figures provided by the PSC.

In an email, an MDU spokesperson noted gas costs are updated monthly.

Tuesday, Oct. 7, the Public Service Commission unanimously approved on a 4-0 vote a settlement negotiated between MDU and the Montana Consumer Counsel for the natural gas rate increase.

PSC Vice President Jennifer Fielder was absent.

MDU provides natural gas service to 88,900 customers in Montana, and its customer base is 88 percent residential, according to the draft PSC order.

In July 2024, MDU filed an application asking for an annual revenue increase of $9.4 million based on its investments in distribution and safety improvements, along with other factors, according to a staff report.

But the Consumer Counsel intervened and said it would support an increase of just $5.4 million.

In January 2025, the PSC authorized an increase of $7.7 million on a temporary basis.

That order took customer bills to $60.26, including $10.21 in “passthrough” gas costs over which commissioners have little discretion, an analyst said.

The stipulation the PSC approved Tuesday set the revenue increase for MDU at $7.3 million. The order said MDU will calculate any refunds owed from the lower revenue increase and pay them back over the next five months.

At the meeting, rate analyst Neil Templeton said the settlement doesn’t reflect what MDU or what the Montana Consumer Counsel wanted, but it landed somewhere in the middle.

In an assessment to commissioners, Templeton said the residential class “came out very well” based on the Consumer Counsel’s advocacy.

The order the PSC approved said the Consumer Counsel only contested the proposed rates for residential customers.

It said the Consumer Counsel did so on the basis the changes “would result in rate shock” and lead to a “fixed charge” that was the highest in Montana — a fixed charge is a flat rate for costs that aren’t variable.

At a meeting, Commissioner Randy Pinocci said his district has the lowest wages in Montana, so when rates are slated to increase, he gets questions.

“My retired senior citizens would like a rate class of their own,” Pinocci said. “Is there any state that has a rate class for retired people who have a fixed income?”

Templeton said he wasn’t aware of such a distinction, although he appreciated the sentiment.

He said the way the PSC tries to help is through supporting programs that are directed at people who have income constraints.

In response to Pinocci’s question about constituent concerns, Templeton said industry analysts typically consider the class of residential customers as underpaying, so residential payers also see proportionally higher increases.

He said Pinocci should remind customers that the cost of everything is increasing, even for utilities, and the PSC is legally obliged to allow a utility the opportunity to recover “prudently incurred costs.”

“I don’t want to say just suck it up. But sometimes, it’s a hard world, and it’s not all golden,” Templeton said. “And we do have increases, and we have to bear them.”

He said that wouldn’t be the case if the utility was trying to “gold-plate” infrastructure.

Commissioner Jeff Welborn wanted to confirm the way the increase was structured would benefit customers who use less energy — the order authorized a smaller increase for an upfront cost, and then a larger increase for the delivery of energy.

Templeton said the PSC had traditionally opted for a lower “buy in” charge and a higher charge for use — “like the cover charge at a bar and then a higher charge for your drinks.”

He said the idea behind that approach is it is expected to help protect lower income people, who tend to have smaller houses, and it also rewards efforts to conserve energy.