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Paul
Big natural gas increase sought
By CHARLES S. JOHNSON Missoulian State Bureau
HELENA - NorthWestern Energy will ask the state Public Service Commission on Monday to raise its natural gas rates by 45 percent for typical Montana residential consumers on top of the temporary 36 percent increase already in rates, officials said Thursday.
If the state Public Service Commission concurs, typical homeowners or renters using an average of 10 dekatherms of natural gas monthly would see their gas bills jump by $338.64 a year, a NorthWestern Energy official said. The average monthly bill for a someone using 10 dekatherms of gas a month would shoot up from the current $62.28 to $90.50.
A dekatherm is the equivalent of 1,000 cubic feet of natural gas, with the typical Montana household consuming 120 dekatherms annually.
Starting July 1, NorthWestern is seeking a $50 million increase in natural gas revenues annually - $37 million to cover rising future gas supply costs and $13 million to make up the difference between what it paid for gas since January and what it charged its 160,000 Montana consumers.
"This isn't something that's easy for us to do as a company," said Pat Corcoran, NorthWestern Energy's vice president for regulatory affairs. Natural gas market prices have "just gone crazy" since last fall and are projected to remain high, he said.
"This is not just a state of Montana problem, a NorthWestern Energy problem," he said. "It's a problem across the country."
NorthWestern's customers will face a bigger hit because they've been insulated from the big changes in natural gas prices over the past four or five years because they benefited from now-expired cheaper buyback contracts the company or its predecessor had with a gas producer. These contracts saved Montana consumers $100 million, Corcoran said.
The Public Service Commission took no immediate action on the request, but commissioners raised plenty of questions at the meeting and afterward.
"It's a shocker," said Commissioner Tom Schneider, D-Helena. "It's going to harm Montana's economy very seriously. It's going to harm low-income folk and middle-income folk and businesses on Main Street. Again, it goes back to fundamental decisions to deregulate, to sell natural gas production properties and to try to fill that vacuum with supply directly from the market."
He said NorthWestern is 100 percent exposed to international and regional gas markets for natural gas and electricity, leaving Montana "in a heck of a mess." Its predecessor, Montana Power Co., sold off its gas production and electricity generation businesses.
"The purchasing practices that were used in the last couple of years leading up to these increases are what's at issue in terms of whether they acted reasonably and prudently," said Schneider, a petroleum engineer. "Could they have done better by locking in, for example, a mixture of fixed price contracts rather than having the entire portfolio floating with indexed market prices? That is a very serious issue in my view."
"I would not be surprised at a public firestorm about the magnitude of the increase," said Commissioner Greg Jergeson, D-Chinook. "Certainly our staff and the Montana consumer counsel are going to have to engage in their standard investigation and audits of the numbers and try determine whether or not they're entirely accurate."
PSC Chairman Bob Rowe, D-Missoula, said the higher gas prices is both a national and a Montana issue, which means it's important to coordinate efforts with other states and federal agencies.
"It is a huge impact," Rowe said. "I've been talking to a lot of customers. The best response obviously is to conserve."
Rowe said the PSC will decide soon whether to make permanent the 36 percent temporary increase it granted NorthWestern effective Dec. 15.
NorthWestern is asking for the full 45 percent increase to be granted as an interim or temporary rate hike on July 1, subject to later adjustment in a final order. That will be subject to a full contested-case hearing, Rowe said.
Paul
Big natural gas increase sought
By CHARLES S. JOHNSON Missoulian State Bureau
HELENA - NorthWestern Energy will ask the state Public Service Commission on Monday to raise its natural gas rates by 45 percent for typical Montana residential consumers on top of the temporary 36 percent increase already in rates, officials said Thursday.
If the state Public Service Commission concurs, typical homeowners or renters using an average of 10 dekatherms of natural gas monthly would see their gas bills jump by $338.64 a year, a NorthWestern Energy official said. The average monthly bill for a someone using 10 dekatherms of gas a month would shoot up from the current $62.28 to $90.50.
A dekatherm is the equivalent of 1,000 cubic feet of natural gas, with the typical Montana household consuming 120 dekatherms annually.
Starting July 1, NorthWestern is seeking a $50 million increase in natural gas revenues annually - $37 million to cover rising future gas supply costs and $13 million to make up the difference between what it paid for gas since January and what it charged its 160,000 Montana consumers.
"This isn't something that's easy for us to do as a company," said Pat Corcoran, NorthWestern Energy's vice president for regulatory affairs. Natural gas market prices have "just gone crazy" since last fall and are projected to remain high, he said.
"This is not just a state of Montana problem, a NorthWestern Energy problem," he said. "It's a problem across the country."
NorthWestern's customers will face a bigger hit because they've been insulated from the big changes in natural gas prices over the past four or five years because they benefited from now-expired cheaper buyback contracts the company or its predecessor had with a gas producer. These contracts saved Montana consumers $100 million, Corcoran said.
The Public Service Commission took no immediate action on the request, but commissioners raised plenty of questions at the meeting and afterward.
"It's a shocker," said Commissioner Tom Schneider, D-Helena. "It's going to harm Montana's economy very seriously. It's going to harm low-income folk and middle-income folk and businesses on Main Street. Again, it goes back to fundamental decisions to deregulate, to sell natural gas production properties and to try to fill that vacuum with supply directly from the market."
He said NorthWestern is 100 percent exposed to international and regional gas markets for natural gas and electricity, leaving Montana "in a heck of a mess." Its predecessor, Montana Power Co., sold off its gas production and electricity generation businesses.
"The purchasing practices that were used in the last couple of years leading up to these increases are what's at issue in terms of whether they acted reasonably and prudently," said Schneider, a petroleum engineer. "Could they have done better by locking in, for example, a mixture of fixed price contracts rather than having the entire portfolio floating with indexed market prices? That is a very serious issue in my view."
"I would not be surprised at a public firestorm about the magnitude of the increase," said Commissioner Greg Jergeson, D-Chinook. "Certainly our staff and the Montana consumer counsel are going to have to engage in their standard investigation and audits of the numbers and try determine whether or not they're entirely accurate."
PSC Chairman Bob Rowe, D-Missoula, said the higher gas prices is both a national and a Montana issue, which means it's important to coordinate efforts with other states and federal agencies.
"It is a huge impact," Rowe said. "I've been talking to a lot of customers. The best response obviously is to conserve."
Rowe said the PSC will decide soon whether to make permanent the 36 percent temporary increase it granted NorthWestern effective Dec. 15.
NorthWestern is asking for the full 45 percent increase to be granted as an interim or temporary rate hike on July 1, subject to later adjustment in a final order. That will be subject to a full contested-case hearing, Rowe said.
