Montana Public Service Commission Announces Utility Rate Reductions Due to Property Tax Adjustments

The Montana Public Service Commission (PSC), announced on February 2 the expected reductions in Montana residential customers’ electric and natural gas utility bills resulting from property tax adjustments affecting Treasure State electric and natural gas suppliers.

PSC President James Brown said of the adjustments, “These adjustments come as a result of property tax rate changes which lower costs for energy suppliers which are then included in utility rates under Montana law,” adding, “These adjustments will generally cut utility bills for the vast majority of Montana’s residential customers.”

NorthWestern Energy’s (NorthWestern) rate change due to property tax reductions results in a total cost of service decrease of $56,001,17 for its electric utility service and $19,106,165 for its natural gas utility service.

For a typical NorthWestern electric residential customer using 750 kilowatt-hours/month, the total bill impact is a decrease of approximately $6.95/month. For a typical NorthWestern natural gas residential customer using 65 therms/month, the total bill impact is a decrease of approximately $4.40/month.

The decrease for both electric and natural gas utility services is a result of NorthWestern’s 2023 actual property tax expense being lower than its 2022 actual property tax expense, as well as the reversal of NorthWestern’s deferred property tax balance from 2022. The decrease in property tax expense from 2022 to 2023 is due to (1) a decrease in the valuation of Northwestern’s property as assessed by the Montana Department of Revenue (MDOR); and (2) lower mill rates assessed by most taxing jurisdictions.

The decrease in valuation by MDOR is the result of a 2022 settlement agreement between NorthWestern and MDOR. NorthWestern’s 2023 centrally assessed market value was approximately $2.7 billion, compared to $2.9 billion in 2022. The reduced property market valuation in 2023 was due to MDOR updating its valuation methodologies to improve accuracy.

NorthWestern’s taxes were further reduced due to required mill levy downward adjustments, which occurred as the valuations of other property classes increased (e.g., the increase of residential property values). When mill levies are decreased, properties that have higher tax rates receive larger reductions (e.g., centrally assessed utilities).

Similarly, Energy West Montana (EWM) and Cut Bank Gas Company’s (CBGC) property tax tracking adjustment figures reflect a total tax adjustment recovery amount of $408,726 for EWM and $44,518 for CBGC. EWM lowered its total tax tracking adjustment from 17.75619% to 15.17038% effective January 1, 2024. CBGC lowered its total tax tracking adjustment from 10.33165% to 7.73032% effective January 1, 2024.

For an EWM natural gas residential customer using 800 CCF/year (approx. 830 therms), the total bill impact is a decrease of approximately $4.19/year. For a CBGC natural gas residential customer using 110 MCF/year (approx. 1,141 therms), the total bill impact is a decrease of approximately $12.10/year.

Likewise, Montana Dakota Utilities (MDU) property tax tracking adjustment reflects an increase in total taxes to be recovered of $1,118,520 for electric utility service and a decrease of $668,502 for natural gas utility service. Therefore, MDU raised its electric tax tracking adjustment from 12.1618% to 14.4028% effective January 1, 2024. MDU lowered its natural gas tax tracking adjustment from 25.1574% to 22.6700% effective January 1, 2024.

For a typical MDU electric residential customer using 625 kilowatt-hours/month, the total bill impact is an increase of approximately $1.23/month. For a typical MDU natural gas residential customer using 8.3 dekatherms/month, the total bill impact is a decrease of approximately $0.51/month.

The Commission regulates private investor-owned natural gas, electric, telephone, water, and sewer companies, and certain motor carriers, and oversees natural gas pipeline safety and intrastate railroad safety. The Commission works to ensure that Montanans receive safe and reliable service from regulated public utilities while paying reasonable rates.

For more information, visit psc.mt.gov or contact the Commission at 1-800-646-6150. Follow the Commission at Twitter.com/@MT_PSC or visit Facebook.com/MontanaPSC.