HELENA — State regulators reviewing NorthWestern Energy’s proposed $35 million rate increase voted Tuesday to reject most of the company’s requests to strike testimony on the future costs to ratepayers for the Colstrip 4 power plant.
In a unanimous vote, the Montana Public Service Commission accepted its legal staff’s recommendation, which said the testimony from several environmental groups and others is relevant in the rate case.
“These issues (on Colstrip costs and value) are relevant, as the Commission needs to make a determination of whether NorthWestern’s Colstrip-related (expenses) are just and reasonable on a going-forward basis,” the staff wrote in a memo released Monday.
However, the PSC also adopted the staff recommendation to hold off on determining whether Colstrip’s market value should be considered in the rate case, until further analysis.
Northwestern Energy owns about one-third of the coal-fired Colstrip 4 plant and is charging ratepayers for the cost of that power. It bought the share of the plant in 2008.
Experts for the Sierra Club and the Montana Environmental Information Center say NorthWestern’s share of Colstrip 4 is worth $100 million or less. The company argues that it’s worth $300 million, the value of which should remain in electric rates for its 360,000 Montana customers.
Environmental groups also have argued that charging ratepayers for the inflated value discourages development of cleaner, cheaper sources of power. They are parties in the rate case before the PSC and submitted testimony last month on how Colstrip 4 should be considered in the case.
NorthWestern, the state’s largest electric and gas utility, has asked the PSC to approve a $35 million annual increase for its electric rates — the first full rate case the company has filed in almost 10 years.
If the full increase is granted, residential customers would see a 7.4% hike — or about $75 a year for the average homeowner.
Two weeks ago, the PSC granted a $10.5 million interim increase for NorthWestern while the case is being considered. The interim increase takes effect on April 1.
The five-member commission will hold a hearing on the full rate request in May and decide the case later this year.
NorthWestern asked last month to strike much of the testimony on Colstrip, arguing that the environmental groups have made it clear they want to shut down Colstrip’s power plants, and that devaluing them in the rate case is a way to do that.