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PSC OK's 27-Percent Natural Gas Rate Hike

Posted on: Thursday, 1 September 2005, 00:00 CDT

Aug. 31--HELENA -- The Montana Public Service Commission voted unanimously Tuesday to temporarily raise the typical NorthWestern Energy's natural gas customer's bill by 27 percent, starting Thursday.

Commissioners expressed frustration that there was nothing they could do but increase the rates, which reflect rising national costs of gas supply, and the end of a previous credit that had reduced NorthWestern's gas rates.

For the typical residential consumer using 10 dekatherms of natural gas a month, that person's bill will jump to $120.01 per month from the current $94.60. Of the $25.41 monthly increase for this typical customer, $14.10 is due to rising gas costs, while $11.31 results from the end of the previous credit that reduced rates, Pat Corcoran, NorthWestern's regulatory affairs vice president said.

The temporary rates will be in place until the PSC issues a final decision, which could adjust them upward or downward, with future rates reflecting these changes.

PSC Chairman Greg Jergeson, D-Chinook, cited headlines about the hurricane that has hit New Orleans and the Gulf of Mexico and has led to higher natural gas prices.

"This is probably a small harbinger of what is to come," Jergeson said, urging consumers to take steps to conserve energy and weatherize their homes.

Commissioner Brad Molnar, R-Laurel, said he wanted to subpoena the state's congressional delegation to ask why members did nothing in the new federal energy bill to address rising gas prices. There was no support for Molnar's subpoena idea.

"Natural gas prices are driven by federal policy, not us," he said.

Commissioner Tom Schneider, D-Helena, said the federal Natural Gas Policy Act passed in the late 1970s was a disaster that precipitated gas price increases. In the late 1980s, natural gas prices were deregulated nationally. Montana benefits relatively because NorthWestern has access to gas in Canada, Wyoming and this state that is priced significantly below the rest of the country, said Schneider, a petroleum engineer.

"That doesn't make it any easier on Montana consumers," Schneider said. "They're going to get hammered this winter."

Since July 1, he said, gas supply prices have risen to $8 a dekatherm from $6, he said. If a utility were buying natural gas on the futures market today for the next 12 months, the price would top $10.60 a dekatherm.

"That's a brutal change," he said. "It's really going to affect our economy. But NorthWestern didn't do this. We didn't do this. It's the market. It's the international market."

Schneider said the PSC has no choice but to approve NorthWestern's interim rate increase request, although it can scrutinize the prudence of its gas purchase strategies.

Commissioner Bob Raney, D-Livingston, said it's critical Montanans understand the PSC regulates only NorthWestern's energy distribution system, which hasn't risen in cost much in a decade, and not its gas supply costs.

"The only people that can control this cost of natural gas is the U.S. Congress or president," Raney said. "They would have to take action that we know they won't take. That action is to reregulate the gas production again."

At the state level, Raney said, all the governor and Legislature can do is spend general tax dollars to supplement the underfunded Low Income Energy Assistance Program to help poor people heat their homes during winter.

Commissioner Doug Mood, R-Seeley Lake, said part of the problem is that U.S. natural gas production is the same as it was 30 years ago, despite up to 40 million new homes.

"But we have a policy in this country that says we have other values that are more important than controlling the cost of natural gas," Mood said, referring to the opposition to expanded oil and gas production and development.

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Copyright (c) 2005, The Montana Standard, Butte

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Source: The Montana Standard

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