Changes at PSC prompt partial reversal of December NWE order

Update courtesy of Utility Regulatory News #4028: The Montana Public Service Commission (PSC), with new members and leadership, has amended certain aspects of a December decision that had authorized NorthWestern Energy (NWE) to implement a revenue decoupling mechanism and an inclining block rate structure in conjunction with an increase in electric rates.

The rate order had been issued only a few weeks before two new members of the PSC were due to be sworn in. Both of the new commissioners had publicly disagreed with the decoupling and tiered rate portions of the order, and upon taking office, they initiated a fresh review of the NWE decision. Pursuant to that review, the commission deemed appropriate the electric and natural gas revenue requirements established pursuant to an underlying settlement, which provided the utility with $7.66 million in electric rate relief but called for a decrease in natural gas rates of a little less than $1 million. The commission also upheld the stipulation’s rate of return on equity (ROE) of 10.25% for both electric and gas operations. However, in that the December decision had reduced NWE’s electric ROE to 10% to account for the company’s lower risk profile because of the decoupling mechanism, the reconstituted commission found that the full 10.25% ROE should be restored for electric services.

The commission explained that because revenue decoupling and inclining block rates were no longer being authorized, there was no reason to disturb the settlement’s original ROE provisions. For the full story, subscribe to URN.

Posted: August 25th, 2011 under decoupling, ratemaking, regulation.
Comments: none