HELENA — NorthWestern Energy electric and natural gas customers in Montana will see increased rates in January, as a collection of changes kicks in, but the biggest impact is from the rising cost of energy supply.
Total electric rates for residential customers, based on average annual consumption, will climb nearly 7 percent starting Saturday, while natural gas goes up 2.7 percent. The change will cost homeowners, on average, about $5 more per month for electricity and $2.50 more per month for natural gas. The actual amount for each customer will depend on their individual usage.
Most business customers will see similar rate changes.
The amount that NorthWestern charges its 330,000 customers for delivering the power and natural gas is dropping a bit, but that decline is more than offset by increases in the cost of supply, which is the actual energy that NorthWestern produces or buys on the market for its customers.
Company spokeswoman Claudia Rapkoch said the electricity increases are due almost entirely to the cost of incorporating two new, long-term power sources into NorthWestern's supply mix: The new Mill Creek gas-fired plant that the company built near Anaconda and a block of electricity from the Colstrip 4 coal-fired plant.
"Even though there is a short bump in rates (now), over the long term, those facilities will provide stable prices and value to customers, because they are not subject to market costs," she said.
The two sources have been placed in the company's rate base, meaning customers will be charged for the power based on its original cost, plus a return on investment for the company.
Rapkoch said the two projects are part of NorthWestern's long-term plan to "wean ourselves off the market" and rebuild a vertically integrated utility, which owns the bulk of its power plants and sources to supply customers, rather than buying power mostly on the market.
In the wake of deregulation in the late 1990s, NorthWestern sold the power plants it owned at the time.
Here's a closer look at the components of these latest rate changes and the effect on consumers:
— Because of the addition of Colstrip 4 and the Mill Creek plant, NorthWestern's electric supply rates for homeowners are climbing 15.6 percent, to their highest level in more than two years. Residential customers had been paying about 5.4 cents per kilowatt hour (kwh) and will now pay 6.2 cents per kwh for the supply.
— Delivery costs for electricity are dropping slightly, as the result of a complex rate case that the Public Service Commission recently concluded. The PSC granted NorthWestern a slight increase over its July delivery rates, but the final outcome reduced a temporary rate increase enacted at the beginning of the rate case, thus the decrease in supply rates as of Saturday.
These changes also include an adjustment to cover the company's higher property taxes this year.
-- The total per-kwh charge for homeowners will rise from 9.31 cents this month to about 10 cents on Saturday, while a monthly, flat-fee charge will drop from $5.15 to $5. For a homeowner who consumes the average 750 kwh per month, the bill in January will rise to about $80, a $5 increase.
— Natural gas supply costs are increasing about 6 percent, while delivery costs have slightly declined, also because of the rate case completed by the PSC. NorthWestern buys its natural gas on the market from independent suppliers.
NorthWestern's natural gas prices bottomed out in June at $2.78 per dekatherm (about 1,000 cubic feet), the lowest level in years, but bounced back up to $5.69 in July, and have remained near that level since. In January, they will be $5.41, which is slightly higher than prices have been most of the fall and early winter.
— The total per-dekatherm natural gas charge, including delivery, will be increasing for homeowners from $8.77 to $9.02, while the flat-fee monthly charge of $6.90 remains the same. For a homeowner consuming the average monthly amount of 10 dekatherms of natural gas, a bill will increase from $94.60 to $97.15.
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