Few politicians directly set the inflationary prices consumers pay, but utility commissions do, and data shows that in Montana those rates are usually much higher than what’s needed.
Records show that commissioners usually aim too high when approving interim rates. The $134 a year increase for an average residential electric customer of NorthWestern Energy, approved by Montana’s Public Service Commission this fall, would be an outlier if it held up.
Interim rates serve as a pay advance for utilities arguing for a more permanent rise in base rates. The intent is to give a company enough revenue to remain financially healthy as it makes its case for a larger, more permanent increase, a process that can take the better part of a year to complete.
But records show that utilities end up agreeing to permanent rate increases that are much less than what commissioners conclude is necessary to keep the company afloat temporarily.
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In 2009, Public Service Commissioners granted NorthWestern, the state’s largest monopoly utility, an interim rate increase of $12.3 million. That amount was $2 million less than what the utility had asked for as an interim rise. But,