MDU to pass property tax costs onto consumers

Montana Dakota Utilities (MDU) will increase its rates for gas and electric customers in eastern Montana this month due to increases in the utility’s property taxes, which is a move that required almost no input from the Montana Public Service Commission (PSC).

Montana law allows utilities to pass a portion of their property taxes on to customers with practically no PSC input. Unless the PSC identifies errors in the utilities application within 45 days of rate increase taking effect, the rate increases cannot be overturned.

During the proceedings, the commission criticized the law and urged legislative action to change it.

“This proceeding was a model of confusion because of an incredibly short deadline imposed by a law that simply doesn’t work,” PSC Vice Chairperson Travis Kavulla said. “The legislature should act now to avoid further automatic rate increases for property taxes from being passed onto consumers.”

Rates will increase by an estimated 2.26 percent for gas services effective Jan. 1 and 0.7 percent for electric services effective May 15. The delay in increase for electric services is due to a condition in the previous electric rate case that prevents MDU from raising electric rates before April 1 of this year. MDU expects to collect an additional $725,000 through both rate increases.

“It deeply troubles me to see these taxes passed automatically onto rate payers in my district,” Commissioner Tony O’Donnell said. “It is highly irregular for a utility to be able to raise rates without the opportunity for the Commission to complete a full review.”