NorthWestern Energy rates are out of control

Yahoo

29-05-2025

Barb Emineth of Laurel speaks about NorthWestern's proposal to put a natural-gas power plant in that town. (Photo by Darrell Ehrlick of the Daily Montanan).
Yikes. NorthWestern Energy has just outrageously imposed a 16.8% increase in electric rates for us captive customers without regulatory approval. This occurred before the June 9 hearing of the Public Service Commission where an 8.3% increase had originally been proposed. But, you may recall, NorthWestern received an increase of 28% a year-and-a-half ago.
What is going on? Are we Montanans being unfairly exploited?
To answer this question, let us examine incentives and responsibilities. NorthWestern Energy, a descendent of Montana Power, is a monopoly. With respect to the distribution of electricity and gas, it seems appropriate for only one energy corporation to be a provider. Otherwise, we might be beset by the chaotic mess of poles, wires, and pipes of competing companies. But with no competition, a monopoly can charge exorbitant fees, public welfare be damned.
To protect the more than 400,000 customers of NorthWestern Energy from predatory charges, the publicly-elected members of the PSC are legally granted the authority to approve or disapprove utility rates and what are essentially profit margins ('return on equity' is the technical name, but corporate profits are what's truly at play). Hence NorthWestern, a large investor-owned corporation, has the incentive to increase profits while the PSC, a governmental agency, has the responsibility of protecting public welfare.
Let's first examine who profits economically from the income NorthWestern is able to generate. The primary beneficiaries are corporate shareholders, most of whom do not live in Montana. The PSC has traditionally granted the utility profits of about 10% annually. What, 10%? Some large corporations, such as successful supermarket chains, are happy to receive a 1 to 3% yearly profit. Outsiders, rather than Montana citizens and our small businesses, are the beneficiaries of the current arrangement. (Large corporations and institutions are able to negotiate lower rates from NorthWestern.)
Further beneficiaries of profits are the corporate executives, most of whom reside in Sioux Falls, the corporate headquarters. It must be great to be Brian Bird, the CEO of NorthWestern. He earns about $2400 per hour. NorthWestern might claim that his compensation is in line with other energy CEOs, but that seems more like an indictment of unjust wealth distribution than a valid argument for such compensation
NorthWestern, with its army of lawyers, engineers, and public relations persons, seems like Goliath in relation to the PSC as David. To the PSC's credit, last year it applied a 7.24% decrease in the interim residential rates NorthWestern charged. But when the rates Montanans now pay are compared with the rates customers in other Western states pay, it is clear the PSC needs to do more to protect Montanans from outsourcing our wealth. For 800 kilowatts of power each month, Idaho Power charges customers $70. NorthWestern has charged $107, but with its imposed increase it will be $125.
NorthWestern's incentive to increase profits for shareholders encourages it to engage in expensive projects of expansion with little regard for prudent spending or even proper approval. A new rate increase would pass on to us consumers the costs of building and operating the Laurel methane-fired plant, brazenly constructed even when violating zoning laws and without approval of the PSC.
Its guaranteed profit means that NorthWestern ratepayers must cover all of the utility's expenses, even those spent on unwise and unapproved projects. We, not they, shoulder the risks. The PSC can restore balance by holding NorthWestern to reasonable standards with fair rates for everyday Montanans.
The PSC will hold a public hearing in Helena on June 9 to discuss how to respond to Northwestern's requested rate increases. PSC members need to deny these unjust rate hikes and thereby reduce NorthWestern's exorbitant 10.8% return on equity (profit). Granting an increase in rates legitimates NorthWestern's arrogant and risky actions that benefit shareholders but further stress local families and small businesses. Ratepayers and the PSC must stand up to this out-of-control monopoly.
Walt Gulick is a Montana State University Billings professor emeritus, NorthWestern Energy ratepayer, and Northern Plains Resource Council member.