HELENA — Calling it a blow to Montana utility customers, state regulators failed in their bid Thursday to win legislative support to require NorthWestern Energy to absorb some of the financial burden that results from unexpected outages.
The Public Service Commission last year ordered the company to refund Montana ratepayers $8.2 million when the utility had to buy electricity from the open market following a 2013 outage of the Colstrip coal plant. The commission said the South Dakota-based company should not have passed on those costs to its 360,000 electricity customers.
Regulators were seeking passage of a bill that would have allowed the commission to place NorthWestern under a cost-sharing plan already in place for other utilities. The arrangement would allow the company to pass on 90 percent of the cost of securing replacement power to ratepayers, while absorbing the remaining 10 percent.
The commission argued that the cost-sharing arrangement would force the company to plan more wisely for outages and take the necessary precautions not only to protect customers but to protect its financial lines.
David Hoffman, NorthWestern’s director of government affairs, called the measure a bad bill that would have punished his company. He called it “disingenuous” for commissioners to assert that they lacked adequate authority to utilities’ decisions to pass on costs to customers.
“They disallowed $8 million last year. Obviously, they do have the authority. And they exercised it to disallow what they think was not a prudently accrued cost. We think that particular cost was prudent and that’s why we’re challenging it,” Hoffman said of the refund.
The legislation died when a bill sponsored by Rep. Tom Woods, a Democrat from Bozeman, couldn’t muster the votes to get a discussion on the Senate floor. It won wide support in the House, but then languished in the Senate’s Energy and Telecommunications Committee. Supporters attempted a legislative maneuver called “blasting” to force it out of committee, but fell two votes short of securing the necessary majority to put the bill on the schedule.
“I’m extremely disappointed to see lawmakers stand between the Commission and our efforts to protect the long-term best interest of ratepayers,” commission chairman Brad Johnson said.
Travis Kavulla, the commission’s vice chairman, added that the bill would have helped the panel place a check on utilities that enjoy monopolies.
“We think this will police their spending and ultimately improve quality of service to customers while decreasing rates. But the legislature has made that task much more difficult,” he said.