NorthWestern official previews power rates
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It looks like power costs for most NorthWestern Energy customers will go up 12 or 13 percent July 1 if the Montana Public Service Commission approves the portfolio proposed to supply electricity to default customers.
"These rates have not been set 100 percent," Scott Patera of NorthWestern said Wednesday. " This is just a proposal at this point," but the rate increases predicted are likely to happen.
Patera spoke at the Holiday Village Shopping Center community center Wednesday at the invitation of the Havre Area Chamber of Commerce. Business owners and government representatives attended.
The rate change is the tail end of the deregulation of electricity passed by the state Legislature in 1997. The bill allowed customers to choose what company they purchased electricity from. Montana Power Co., which was purchased by NorthWestern March 12, was selected to be the default supplier.
The 1997 legislation set 2002 as the date for all customers to choose their energy supplier, but the 2001 Legislature extended that date to July 1, 2007, because few customers had made a choice, Patera said. The issue before the PSC is whether to approve the portfolio of suppliers NorthWestern buys electricity from to supply customers who haven't yet chosen a supplier called default customers.
The rate increases expected if the portfolio is approved vary. Residential customers are expected to see a 12 percent increase, and most businesses should see a 13 percent increase. So-called primary users, with extremely high electrical use, would see about a 26 percent increase if they are default customers.
Patera said all primary users in the Havre area, including Havre Public Schools and Burlington Northern Santa Fe Railway, have selected suppliers of choice, so they won't see any increase because of the new portfolio. Their rates will be determined by the contract they have with their suppliers.
Once a portfolio is approved, those rates will be set until the end of the contract, through 2007.
The increases listed are estimates only, Patera said, and will actually vary depending on each customer's electricity use. NorthWestern will provide a free analysis to give an estimate of the expected rate increase for each customer who requests one.
Customers can reduce their use by investing in energy efficiency, he said. Installing more efficient lighting systems can save 35 to 40 percent, and installing more efficient heating, air conditioning and ventilation systems can save 15 to 20 percent. Significant reductions can be found by improving the efficiency of electrical items, he said.
Switching to more efficient lighting systems can pay for itself in three years, Patera said. Programs are available to help reduce the installation cost.
"That's a pretty fast payback in energy," he added. " Doing some of this analysis really helps some of this analysis really helps you out a little bit."
The fund created by the universal systems benefit charge, a small fee on each power bill required by the 1997 Legislature, can be used to subsidize a customer's energy use improvements, Patera said. Programs available from the fund include efficiency improvements, energy use audits, renewable energy programs and energy assistance.
Pat Patterson, NorthWestern's operations manager in Havre, said wide swings in electrical prices last year were due to the volatility of supply and demand. Electricity is a commodity, just like grain or gasoline, he said, but there is no way to store significant amounts of it. If demand jumps above the supply, prices will go up.
Because of the drought, many hydroelectric plants weren't producing much electricity, Patterson said. When the demand shot up in the hot summer, especially in California, so did prices. Many new generators are now being planned or built, he said, which should help even out supply and demand.
"I think we'll see some kind of stabilization," Patera said.
There was speculation that some electrical suppliers, especially in California, had driven prices higher than necessary, Patterson said. The federal government then stepped in and investigated, he said, and required that companies prove price increases were justified. The prices started coming down immediately, he said.
The price fluctuations didn't affect Montana Power Co. customers because the Legislature had frozen its rates.