Montana’s utility regulators failed Thursday in an attempt to push forward their top priority of the legislative session — changing the law to limit how much of the costs of electricity supply NorthWestern Energy can pass onto its customers.
Travis Kavulla, a Republican commissioner with the Public Service Commission, says there is inconsistency in how the state’s two utilities, NorthWestern Energy and Montana Dakota Utilities pass costs onto customers, and that needs to change.
Kavulla testified before a committee of lawmakers in support of House Bill 193 last month.
"The statutory language is too broadly defined to allow the PSC to do it’s job of protecting consumers and balance the interest of the regulated utility."
Kavulla says NorthWestern Energy can pass on 100 percent of its costs when it buys electricity from third party energy producer, this might happen when there is a power outage in NorthWestern’s supply.
The proposal in House Bill 193 would force Northwestern into similar regulations that MDU currently follows, allowing the utility company to pass on 90 percent of its costs of replacement power to customers. The company would then have to pay for the other 10 percent.
The bill’s sponsor is Tom Woods, a Democrat from Bozeman. He says current law allows NorthWestern to pass on costs to ratepayers that are too broad and aren’t actually paying directly for electricity.
"With NorthWestern they don’t have to, they just say, these are our outage costs they don’t have to go through the accounting of what they are, and because of that very broad definition they are allowed to put planning costs and administrative costs, declare them as outage costs and put directly on bills, our bills, whereas other companies can’t do that."
Woods says some of those administrative costs, like travel, and food expenses for NorthWestern employees can get passed onto ratepayers, and they shouldn’t.
But John Alke with NorthWestern Energy with says the Public Service Commission already has the authority to not allow the company to pass costs to customers.
Last year, the PSC ordered NorthWestern Energy to refund customers more than $8 million passed ratepayers for an outage at the Colstrip power plant in 2013.
Alke also testified during House Bill 193’s Senate hearing in March, saying NorthWestern must already have its costs approved by the Public Service Commission:
"This bill should be a do not pass," Alke said. "This body should not sanction uncertainty of the recovery of prudent costs. Remember, every dollar, investment dollar, the commission has already determined was a prudent expenditure. So what possible rationale could there be for creating a new tracker where we have to eat 10 percent of the cost that the commission has already determined are reasonable.”
Alke also says Northwestern and Montana Dakota Utilities are very different companies and shouldn’t be regulated the same.
House Bill 193 was tabled in committee a few days after its first hearing in the Montana Senate, last month.
A last ditch effort Thursday to blast the bill out of committee and into the Senate Floor for debate failed by 2 votes.