Michael Dalton

The meeting commenced with a sound check and the Pledge of Allegiance, followed by confirmation of a quorum. A public comment period was held, featuring statements from Ron Heep regarding Commissioner Fielder's investigation into Commissioner Molnar and the merger between Northwestern Energy and Black Hills Corporation, and from Karen Kirk expressing concerns over the disproportionate rise in residential electricity prices compared to commercial/industrial sectors, citing Northwestern Energy's rate increases and poor management decisions regarding the Yellowstone generating plant. The primary agenda item involved work session number one concerning docket number 2020.09.094 regarding Northstar Development LLC. Commission staff provided an update on settlement negotiations stemming from customer complaints about service and reliability issues, noting that Northstar failed to cooperate initially, leading to preliminary penalties of $86,700. The proposed settlement addresses six key concerns: system maintenance/improvement (including a $135,000 project funded partially by a $15,000 owner contribution to a new reserve account, and Northstar waiving recovery of $21,680 in prior costs), lawn sprinkling restrictions and monitoring, meter inspection/maintenance/repair/replacement protocols, procedures for handling billing errors, communication plans with customers (including required identifiable clothing for operators), and enhanced compliance reporting (monthly, quarterly on the reserve account, and annual reports). In return for Northstar's commitments, the commission agreed to stay the imposition of the preliminary penalties.

The Out of Cycle Work Session focused primarily on a presentation by an associate general counsel regarding Northwestern Energy's plans for the acquisition of the Puget Share of the Coal Strip plant. The key discussion point was the decision to assign these assets to a non-utility subsidiary outside of the utility ring fencing to protect customers from associated O&M cost increases until load growth justifies inclusion in rate base, expected around Q4 2027. Commissioners inquired about compliance filing updates with the Western Power Pool and the ability to access this capacity during potential energy shortages, despite the current regulatory restrictions. The discussion also touched upon the opportunity for increased energy transfer via reconductoring lines and managing capacity in light of anticipated load growth, including potential data center developments.

The work session focused on Northwestern Energy's application to increase electric and natural gas service rates and to consider a final decision in their combined rate case (Docket No. 2024.05.053). Staff presented recommendations concerning two main contested issues: the Yellowstone County Generating Station (YCGS) and the Power Costs and Credits Adjustment Mechanism (PCAM) base. Regarding YCGS, staff recommended excluding approximately $45 million in cost overruns from rate recovery due to prudence and risk management concerns, and advocated for an increased annual revenue requirement adjustment of about $34.8 million based on specific depreciation proposals. For the PCAM base, staff recommended rejecting Northwestern's proposed capacity scarcity premium while adopting their proposed base level of approximately $119 million, alongside temporarily suspending the cost-sharing mechanism. Furthermore, the commission reviewed revenue requirements related to the partial electric stipulation, which proposed a $61 million increase in electric transmission, distribution, and generation rates (excluding YCGS), resulting in a total combined electric revenue requirement increase of $1.5 million when accounting for contested issues. The session also covered Northwestern's proposal for a Wildfire Mitigation Balancing Account (WMBA), which staff deemed prudent for recovering incremental operating and maintenance and insurance expenses, subject to additional reporting requirements.

The commission authorized staff to procure legal counsel to aid in intervening in FK docket ER26-129, with the cost of legal services capped at $25,000. They reconsidered and negated the small purchase procurement of legal services for intervention in FK 26-129, increasing the cap to $25,000 to seek legal counsel for this intervention.

The meeting covered Northwestern Energy's Gas and Electric rate case, focusing on efficient work and adherence to topics. Key discussions included the PCAM base, with a motion to approve Northwestern's proposed power cost and credits adjustment mechanism base. The commission also addressed the 9010 sharing mechanism for the PCAM, voting to suspend it temporarily until design issues are resolved in another docket. Additionally, the partial electric stipulation was approved with added requirements for the wildfire mitigation balancing account, and Northwestern's proposal for refunding customers was discussed, recognizing that approval of tariffs for self-implementing contested issue revenue requirements does not set a precedent.