Montana Public Service Commission approves Montana-Dakota Utilities settlement

The Montana Public Service Commission (PSC) approved a settlement proposal from Montana-Dakota Utilities (MDU) on Friday, with the electric company set to raise its rates by 13.3 percent over the course of two years.

MDU proposed a 21.1 percent electricity rate increase in June, which resulted in the lawsuit. The Montana Consumer Counsel and the Large Consumer Group filed the lawsuit to protect eastern Montana from paying for services not rendered.

“Customers should pay only for power plants that are actually used and useful in providing utility service,” PSC Commissioner Travis Kavulla (R-Great Falls) said. “If a plant isn’t providing value to customers, then customers should not be paying for it.”

The parties reached an agreement the day before the case was to begin. The new agreement will result in an additional $7.4 million over the course of two years in the eastern Montana area. This will result in a decrease in return on equity for shareholders from 10.25 percent to 9.0 – 9.5 percent.

The success for the consumer organizations came about after the commission discovered that MDU had attempted to charge the eastern Montana region for two combustion engines that would not services the area, along with the adoption of new technology that was not yet in effect.

“The MDU rate application gives a preview of the challenges that Montana
utility companies face with trying to predict the energy future,” PSC Commissioner Kirk Bushman (R-Billings) said.