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NorthWestern Energy electric rates higher than regional peers

Montana's utility regulation commission has come under criticism recently for an agreement that lets the state's largest power company, NorthWestern Energy, implement a substantial residential electric rate increase. With some help from retired MTN News reporter (and occasional MTFP contributor) Mike Dennison, we've compiled a comparison of the residential electricity rates charged by different utilities around the region, estimating the typical monthly electric bills paid by residential customers who consume 750 kilowatt-hours of power each billing period.

Though still below the national average, the state's largest utility, NorthWestern Energy, is a bit spendy when compared to its peers serving homes in Washington, Oregon, Idaho, Wyoming and Utah - as well as some of the companies that provide service in the portions of Montana outside of NorthWestern's coverage area.

Our analysis estimates that the typical NorthWestern residential customer's bill is 6% higher than the second-most-expensive utility and 73% higher than the most affordable utility in our round-up, Idaho Power, which obtains about one-third of the power it transmits to the larger Boise area from hydroelectric sources.

NorthWestern points out that some of its aforementioned peers, such as Rocky Mountain Power, are in the midst of rate reviews like the one NorthWestern just wrapped up, which could mean higher rates are coming for their customers. Company spokesperson Jo Dee Black also said that 16% of the per-kilowatt-hour rate incorporated into NorthWestern's residential rate structure can be attributed to local and state taxes. (If that cost was stripped from power bills, we estimate the typical 750-kWh NorthWestern customer would pay about $96 a month, on par with the existing rates for Montana-Dakota Utilities customers.)

While NorthWestern and some other utilities also provide their customers with natural gas service, these numbers represent the costs for electric power alone. The utilities in our sample typically charge their customers a base rate for monthly service and then add a per-kilowatt-hour rate that scales based on electricity consumption. Where that rate varies between winter and summer, we've calculated our figures using time-weighted average rates. Additionally, we've sourced the national average we're presenting here to the U.S. Energy Information Administration.

The rate increase NorthWestern first petitioned the PSC for in August 2022 was originally projected to raise residential customers' rates by 28%. However "true-up" adjustments designed to reflect the actual (rather than estimated) cost of market power purchases have resulted in a slightly smaller increase of 24%, a company spokesperson said Nov. 8.

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