NWE Gas, Electricity Charges to Decline

Apr 10 - Billings Gazette, The

For the third month in a row, NorthWestern Energy is reducing its electricity and natural gas rates in Montana, responding to a continuing decline in market prices.

As of April 1, natural gas rates will have declined 22 percent and electricity rates 9 percent from their January highs for residential customers in Montana.

"Market prices are continuing to soften for natural gas (nationwide)," company spokeswoman Claudia Rapkoch said. "You see that show up in electricity prices, too, because so much electricity is generated by natural gasfired plants."

Electricity rates for NorthWestern customers are at their lowest level in a year, natural gas rates haven't been this low since late last summer, when they jumped 27 percent.

A NorthWestern official said Wednesday there remains "a potential for a lot of volatility" in power prices because the utility is buying all of its power and gas on the open market.

"We can manage some of that (volatility), but customers are ultimately going to be exposed to changes in the market," said John Hines, director of energy supply planning.

Unlike most utilities in the region, NorthWestern does not own any electricity power plants that can provide power at more stable, regulated rates. Its plants were sold in 1999 to PPL Montana.

Despite the price declines coming in April, NorthWestern customers are still paying relatively steep prices for their natural gas and electricity.

The residential electricity price will be 8 cents per kilowatt hour on April 1, nearly the highest in the Northwest region among major utilities. The average Montana household customer of NorthWestern Energy consumes about 750 kilowatt hours per month.

Natural gas rates will be $10.44 per dekatherm in April. The average monthly gas consumption for Montana households served by NorthWestern is 10 dekatherms.

A year ago, gas rates for NorthWestern were in the $8to $9-per- dekatherm range before starting an unprecedented uphill climb last fall, peaking at $13.39 per dekatherm in January.

Eastern Montana natural gas customers served by MontanaDakota Utilities are paying prices much lower than NorthWestern's.

As of April 1, MDU gas rates in Montana will decline by nearly $1 a dekatherm to $8.60 per dekatherm, almost $2 less than NorthWestern's price.

MDU rates have been consistently lower than NorthWestern's for the entire winter, but not always by that much.

Hines said the difference may have to do with how each company computes its monthly prices for natural gas. Both adjust prices monthly to coincide with changes in gas markets.

Hines said NorthWestern adjusts its rates based on a 12-month forecast of future gas prices.

Dan Sharp, spokesman for MDU in Bismarck N.D., said the lower price could be from a number of factors, such as where MDU buys its natural gas or the cost of transporting its gas through its system.