BILLINGS, Montana — A utility company is proposing a 21 percent electricity rate increase for residents and businesses in dozens of eastern Montana communities, and state regulators said Tuesday they'll carefully review the case to make sure customers don't get gouged.
The proposal from Montana-Dakota Utilities would increase residential electricity bills on average by $14.80 a month, or $178 a year, according to filings from the Bismarck, North Dakota, company. MDU serves 26,000 eastern Montana customers.
The five-member Public Service Commission has 10 months to decide whether to approve the increase, which spokesman Eric Sell described as unusually steep.
"You can't just have utilities set their own rates because then consumers get gouged. But you can't have rates for consumers set too low where (MDU) can't invest in their business," Sell said.
The rate increase would bring MDU almost $12 million in additional annual revenue.
Documents submitted to the commission by MDU detail the expenses that it says are driving the need for a rate increase.
They include MDU's share of $400 million in pollution controls at power plants in Sidney, Montana, and Big Stone City, South Dakota; a newly constructed $77 million gas plant near Mandan, North Dakota; a $220 million wind farm in North Dakota and two small natural gas plants in Sidney.
Also included are new substations, lines and other equipment needed to meet growing electricity demand in the Bakken oil-producing region of Montana and North Dakota, said MDU spokesman Mark Hanson.
The costs are being shared by customers in neighboring North Dakota and South Dakota.
"The timing of them unfortunately happened at the same time," Hanson said, adding that the company had been prudent in its investments.
MDU's last rate increase was just over 6 percent in 2011. Since then, the company says spending on its electrical operations in Montana increased by about 60 percent.
The headline has been corrected to show MDU is seeking to raise electricity rates, not gas rates.