PSC Approves Interim Rates For MDU
During a work session on Tuesday, March 3, the Montana Public Service Commission approved, after careful review, a request by Montana- Dakota Utilities (MDU) for an interim electric rate increase in Docket 2025.09.072.
In its full rate case submitted last September, MDU requested commission approval of an annual revenue increase of $14.1 million to cover the company’s additional costs of providing electricity to approximately 20,000 Montana customers, which have increased over the three years since its last rate case. The utility identified significant expenses including a 49 percent ownership stake and power purchase agreement with the Badger Wind Project, investments in the Cedar Hills and Diamond Willow Repower Projects, and rebuilding the Cabin Creek to Baker 60 kV transmission line due to deterioration and wear on the line, which was constructed in 1944.
Anticipating that the full rate case will take close to a year to complete, MDU has been seeking authorization of an interim rate increase to cover approximately 74 percent of its total request while the case is pending. The Commission considered the matter three times over the past three months and, after extensive discussion, ultimately authorized interim rates that will take effect April 1, and allow MDU to recover revenue equal to approximately 55 percent of its total rate request, or about $7.7 million in additional annual revenue, while its full rate case is pending. This step-by-step approach reflects the Commission’s commitment to close oversight of utility spending and customer impacts. By setting the interim rates to begin on April 1 instead of Jan. 1, as MDU originally requested, the commission limited the impact on customers during the winter heating season and reduced what customers will pay in 2026 compared to the utility’s original interim proposal. For a typical residential customer, the approved interim rates will raise the average monthly, annualized electric bill by about $10.32, effective April 1, instead of the approximately $14.02 per month increase MDU requested to take effect on Jan. 1.
Commission President Jeffery Welborn said commissioners were mindful of customer impact, underscoring the commission’s duty to balance affordability and reliability. “Our job is to keep electric service as reliable and affordable as possible. Every rate decision affects how utilities borrow money to maintain a healthy grid system, what interest rates they pay, and, ultimately, how dependable service is for everyone. It’s always about finding the right balance.”
Commission vice president Jennifer Fielder noted she joined commissioners Welborn and Molnar in voting against MDU’s full interim rate request when it was moved for adoption by Commissioner Pinocci last December. “I opposed approving 74 percent of the utility’s claimed expenditures without an in-depth review of the facts,” Fielder said. “I think the commission made the right decision today by authorizing a delayed implementation, which will ensure MDU will only recover 55 percent of the utility’s reported cost increases while the case is pending, and we will continue to parse through the entire record. The decision reserves further judgment until the entire case is fully scrutinized.”
Under Montana law, interim rates are discretionary, temporary, and refundable, with interest, if the commission ultimately approves permanent rates that are lower than the interim levels. The final rate cannot be set until the commission concludes a full contested case proceeding that includes rigorous analysis of evidence, extensive expert witness testimony, and opportunities for cross-examination and counter-arguments by opposing parties. In its full rate case filing, MDU cited cost increases equal to an average of about 8.6 percent per year over the approximately three-year period since rates were last adjusted. The interim rates approved by the Commission this week limit the amount the utility may begin recovering now to roughly 4.7 percent per year during that span, on an interim basis, subject to adjustment in the final order. At the conclusion of the case, the costs MDU is allowed to recover from customers may be adjusted upward or downward based on the commission’s complete findings.
