Utility Not Allowed to Hike Rates to Make up for Reduced Use

End of the Lost Revenue Adjustment Mechanism will reduce the amount the company collects from Montana customers by $12.7 million

By Justin Franz

HELENA — The Public Service Commission has rescinded a policy that allowed NorthWestern Energy to increase natural gas and electricity rates to make up for reduced customer usage due to energy-efficiency programs.

PSC officials say the end of the Lost Revenue Adjustment Mechanism will reduce the amount the company collects from Montana customers by $12.7 million next year.

Commissioner Roger Koopman said in a statement Friday that raising rates on consumers who are trying to conserve energy is one of the worst ideas policymakers has ever come up with.

The PSC approved the program in 2005. NorthWestern proposed it as a way to recover lost transmission and distribution revenues.

The panel ruled that circumstances have changed since then and halting the program is necessary to ensure fair and reasonable electricity and gas rates.

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