Two weeks after NorthWestern Energy relied upon a little-known, 50-year-old law to raise electricity customers’ rates by 17% without regulators’ approval, the state utility board on Monday opened a two-week hearing to determine how much of the increase will stick.
At issue is the company’s ability to recover its investments in electricity and generation infrastructure such as the 175-megawatt gas plant in Laurel that came online last fall, upgrades to its hydroelectric facilities and an expanded and upgraded transmission system. Both the return on investment of 10.8% and the electricity base revenue requirement of $156.5 million NorthWestern is seeking are substantially higher than the utility’s last round of rate hikes the PSC authorized, which resulted in a 28% cost increase for the average residential customer.
NorthWestern argues that to recoup the nearly $874 million in investments it has made in “safe, reliable and affordable” service since the conclusion of that rate case in October 2023, the PSC should approve its new rate structure. NorthWestern lawyer Sarah Norcott said meeting the needs of its approximately 400,000 electricity customers “during Montana’s coldest nights and hottest days” requires assets like the Yellowstone County Generating Station. The utility also argues that YCGS, which has been feeding power onto the grid for the better part of a year, will offset some of the increase to customers’ bills by reducing the purchases it makes on the market and allowing it to sell excess electricity to other utilities. Both, it argues, will defray the increase customers will see in their monthly bills to pay for the plant.
YCGS is the largest single asset the company has built or purchased since its last rate case. NorthWestern CEO Brian Byrd argued the plant will prove to have a “very small impact to customers” and there will be a “tremendous” amount of natural gas generation coming on to the nation’s grid now and in the future.
Intervening parties opposed to the rate hike counter that spending more than $300 million to build the plant, which has been the source of environmental- and zoning-related litigation, was ill-advised. Montana Consumer Counsel attorney Jason Brown told commissioners during his opening remarks that NorthWestern shouldn’t be allowed to use its captive ratepayers as a “backstop for … needlessly risky and questionable decisions,” pointing to multiple lawsuits, cost overruns and delays as examples of the risks that should be shouldered by NorthWestern’s shareholders rather than its customers, who are unable to shop around for service from other utilities.
In filings before the commission, several of the intervening parties maintain that NorthWestern has missed the mark with projected energy purchases and sales in a way that will continue to burden customers with ever-growing rates. NorthWestern has projected that the gas plant will allow it to buy fewer megawatts of generation on the market and sell more to other utilities, offsetting customers’ share of the plant’s total price tag by tens of millions of dollars. But environmental groups point to a recent $26 million undercollection described in a recent NorthWestern Energy filing as evidence of volatility in this arena and NorthWestern’s unreliable forecasting.
Opponents to the rate hike also argued during their opening remarks in the PSC’s quasi-judicial hearing that public health and economic concerns favor cleaner, more affordable technologies than YCGS and the Colstrip coal-fired power plant NorthWestern is doubling down on as utilities in Washington pull out of the 40-year-old facility.
“A least-cost, low-risk, reliable resource portfolio requires substantial transmission, renewables and storage investments, as is empirically true for virtually every other major utility in the West,” argued Melissa Hornbein , representing Renewable Northwest, a nonprofit advocating for clean energy. “NorthWestern’s failure to consider transmission capacity in its resource modeling constrains generation development, market sales and diminishes Montana ratepayers’ ability to access cheaper electricity, especially during peak periods.”
Attorneys representing Montana Environmental Information Center, Human Resource Council, Natural Resources Defense Council and NW Energy Coalition reserved their opening remarks for when they call their experts to testify later in the proceedings.
More than 50 Montanans gathered outside the commission’s office in Helena to protest the rate hike, NorthWestern’s investment in fossil fuel plants and a relationship generally between the utility and its regulator that protesters described as overly cozy.
“This is your chance to stand up for Montanans, not fossil fuel investment. You work for the people, not for NorthWestern Energy, so please stand up for us,” Sarah Lundquist, with Families for a Livable Climate, said at the protest.
PSC President Brad Molnar of Laurel presided over the hearing. Commissioners Anne “Annie” Bukacek and Jeff Welborn joined him at the front of the room and PSC Vice President Jennifer Fielder tuned into the day’s proceedings remotely. Commissioner Randy Pinocci, who represents central and eastern Montana, was not present for the morning testimony, which included about 20 public comments and opening remarks by NorthWestern Energy, the Montana Consumer Counsel and the Large Customer Group, which represents about a dozen of NorthWestern’s largest customers. Pinocci joined the proceeding remotely after lunch, citing vehicle issues. Over the next two weeks, experts called by NorthWestern and the intervening parties will focus on the utility’s electricity service. NorthWestern and a number of the intervening parties already reached an agreement for a 9% increase in its natural gas rates, which is forecasted to raise the average residential customer’s monthly bill by $4.74.
This story was updated June 10, 2025, to correct the name of the attorney who provided opening remarks for Renewable Northwest.
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