NorthWestern Energy to raise rates for first time in 34 years

STAFF REPORT

NorthWestern Energy in South Dakota will raise its electric rates for the first time in more than 30 years, effective Jan. 1.

The South Dakota Public Utilities Commission will allow NorthWestern to raise its electric rates by 15.5 percent, the first such increase since 1981. The rate increase will help NorthWestern generate $20.9 million in additional revenue.

In its application to the PUC, NorthWestern cited several reasons for needing increased revenue, says Leah Mohr, deputy executive director of the PUC. Those included the addition of a power plant in Aberdeen, S.D., federally required environmental controls at three coal-fired generating plants, integration with the Southwest Power Pool Regional Transmission Organization and distribution and transmission upgrades, including a transmission project near Yankton, S.D.

“It’s truly extraordinary to consider the capital investment NorthWestern has made in the last 34 years and the fact that the increase was kept as low as 15 percent,” says PUC Commissioner Chris

Nelson. “It’s important to understand that much of this increase is the result of the company complying with federal mandates.”

NorthWestern originally filed its application in December 2014. In the months following the application, the company purchased Beethoven Wind, an 80-megawatt wind facility near Tripp, S.D. The cost of the purchase was included in the rate case. Before the wind farm purchase, NorthWestern’s electric customers were obligated to pay for the purchase of energy produced by Beethoven Wind, as a result of federal regulations. Incorporating the wind farm purchase into base rates will save customers approximately $44 million in the next 20 years.

“I was impressed that throughout the process NorthWestern, PUC staff and the intervenors kept reliability and limited customer impact as top priorities,” says Kristie Fiegen, vice chairperson of the PUC.

Throughout the process, consumers were involved to ensure the best decision was being made. “The commission held a public hearing about the rate increase in May in Yankton at the formal request of NorthWestern Energy customers,” says PUC Commissioner Gary Hanson. “Additionally, a number of consumers submitted written comments to us. We fully understand how important it is to South Dakotans that the cost of energy be affordable while maintaining reliability. I believe that has been achieved with our decision.”

A typical residential customer using an average of 750 kilowatt-hours of energy each month will see an average monthly increase of about $16.41, the PUC says in a news release. The PUC imposed a moratorium prohibiting NorthWestern from filing a request for an increase of base rates that would go into effect before to July 1, 2018.