NWE's recent rate increase, one point

Most of the Lee Papers in MT covered the story with some variation of this article written by Mike Dennison, which makes two very important points:

"Because of the addition of Colstrip 4 and the Mill Creek plant, NorthWestern's electric supply rates for homeowners are climbing 15.6 percent, to their highest level in more than two years. Residential customers had been paying about 5.4 cents per kilowatt hour and will now pay 6.2 cents per kwh for the supply.

Delivery costs for electricity are dropping slightly, as the result of a complex rate case that the Public Service Commission recently concluded. The PSC granted NorthWestern a slight increase over its July delivery rates, but the final outcome reduced a temporary rate increase enacted at the beginning of the rate case, thus the decrease in supply rates as of Saturday."

Just so we are clear, Colstrip and Mill Creek are increasing rates for Montana Consumers...

NWE agrees to $765,000 in fines

In early December, the MT PSC approved a settlement with NWE over matters concerning how they handled the affiliate transaction of Colstrip 4 (which was owned by an affiliate of NWE before being "bought" by the consumer rate-base).  In particular, the MT PSC found that NWE had used it's public utility revolving credit line to finance transactions, which is backed by the Montana Consumer, without seeking the MT PSC's approval as required.  The matter was finally resolved in District Court, where the settlement was reached.  

The Order and settlement provide that NorthWestern Energy will invest shareholder money in three projects:

• $500,000 in a 1-MW flywheel demonstration project to help augment their new Mill Creek generation station, and primary frequency regulation resource for load and supply variability
• $265,000 in creating a Smart-Grid demonstration house in Helena, that will showcase the potential for new technologies and energy efficiency. 
• Continued participation and funding of the Pacific NorthWest Smart-Grid pilot, which is a multi-million dollar effort of utilities in the region to test and deploy certain technologies.  

Commissioner Molnar dissented on the Order, but did not provide any written dissent explaining his decision.   Neither Mike Dennison or any paper in the state picked up the story...  

Update: Inverted Block Rates in Montana

The Montana PSC denied all Motions in the case, yesterday Dec. 28th, 2010.  This means, for better or worse, the Montana PSC original order implementing decoupling will stand, until the whole concept is outlawed by the Montana Legislature.

FERC denies Grasslands proposal for their Wind Spirit Project

Grasslands Renewable Energy is trying to build the Wind Spirit Project in eastern Montana that would collect 3000 MW of renewable energy.  A first step, was getting the FERC to approve their funding methodology which would have certain subsidiaries of Grassland's parent company, a Spanish industrial conglomerate, owning wind projects along the collector system.  The project is certainly innovate, but the FERC issued an Order recently denying their proposal would "improperly grant an undue preference to certain transmission customers, and as such is inconsistent with section 205 of the Federal Power Act (FPA) and the Commission's open access principle".

There is a temptation to draw parallels to other Transmission projects in the state, but I don't know what the lesson is, other than developing transmission is difficult and the FERC is not just rubber stamping stuff.

Credit where Credit is due

This blog has made a point of targeting one soon to be member of the Montana Public Service Commission, Travis Kaulla, for accuracy.  I believe that this was a factor largely of Travis being one of the few Commissioners willing to actually put ideas on energy policy out into the public sphere, and also the fact that he was working full time and trying to run a campaign (which made it easier to miss details...).

In that context, I did want to commend Travis on his recent blog post, of which I believe to be both an accurate portrayal of the MATL situation and a very apt summary of the political, legal, and economic realities of the project.

Keep it up!

Inverted Block Rates and Decoupling Dead in Montana?

On December 20th, the Montana Consumer Council, Human Resources Council District XI/Natural Resource Defense Counsel (HR/NRDC) and NorthWestern Energy filed a joint motion asking the MT PSC to reverse the Commission's previous decision to implement inverted block rates and decoupling.

The parties agreement on this outcome can be interpreted in only one way: The MT PSC really messed up.

The fact that both supporters of the new rate design (NWE and HR/NRDC) and opponents (MCC) have decided that the MT PSC's final rule on the matter is so flawed that it is better to just junk it, demonstrates how fundamentally flawed the final order is.

The parties highlight a number of specific problems in their individual motions that include the MT PSC's lowering of NWE's rate of return for certain energy efficiency investments, not including natural gas, and the use of weather normalization.

It is truly disappointing that the MT PSC was not able to work with the parties, including the MCC which did not oppose the new rate designs on principal, to get a pilot proposal in place that would work.

It is after all, not a novel idea.  All three regulated electrical utilities in Idaho have similar rate structures, the Montana Power Company used to use these rates, and across the United States they are known to produce increased energy efficiency investment.

I understand that the Motions will be considered by the new Montana PSC in January.  One outcome, which would be very unfortunate, is to not honor the joint request of the parties and leave the fundamentally flawed order in place.  This would result in a failed program, that would set-back efforts to implement these common sense rate structures for years.

Though i note that one Montana Legislator has requested a bill draft that would "Limiting a public utility's ability to implement inverted block rates".  Thank freshman Jason Priest for his help in making it harder, if not impossible, to apply basic cause causation principals to our electrical rates.  


 

Inverted Block Rates & Decoupling, approved

I just had a chance to watch the MT PSC's meeting from last week.  It was a long and complicated meeting, but here is the outcome as I heard it:

• Decoupling is approved on the Electric Side only
• Inverted Block Rates are approved for both electricity and natural gas

It is important to keep in mind that these are pilot proposals, with a (i believe) 4 year time horizon.  The PSC should have an Order out in mid-December, which will clarify a number of the procedural issues around implementation.

A previous post on the topic, implied that the splits for inverted block rate groups would apply to all consumption by the individual.  Based on what i heard, this is not the case.  All customer would get the benefit of the the reduced rate for their first 350 kWh.

Please, by all means, comment if i got the decision of the meeting wrong.  I had been waiting for Mike Dennison, Charles S. Johnson or frankly anybody to write up the meeting, but alas...