Jan. 9—PIERRE, S.D. — The South Dakota Public Utilities Commission Tuesday, Jan. 9 approved a rate hike for NorthWestern Energy that will help the utility pay for the Bob Glanzer Generating Plant as well as $267 million in overall infrastructure investments.
The vote, held at the most recent commission meeting in Pierre, was unanimous, with commissioners Kristie Fiegen, Gary Hanson and Chris Nelson all voting yes.
"We are watchdogs for our customers in South Dakota, and we want to make sure the benefits are flowing to our ratepayers," said Fiegen, chairperson of the South Dakota Public Utilities Commission. "With this, NorthWestern has put in a filing that is appropriate and fair for our customers and is bringing reliability to the grid."
NorthWestern in June had originally proposed to increase base electric revenues from South Dakota customers by $30,873,649, which would equate to an approximate 16.32% increase, according to materials provided with the meeting agenda.
In the end, NorthWestern and the commission reached a settlement that reduced that rate impact. The settlement allows for an 11.38% increase in NorthWestern Energy total electric bills, or a 17.97% increase in base electric rates from a $21.52 million increase in South Dakota electric revenues.
Under the new arrangement approved Tuesday, a typical residential customer using an average of 750 kilowatt-hours of energy a month will see an increase of $13.67 in their monthly bill, as opposed to an increase of $19.14 per month under the original request.
The rate changes will affect the bills of approximately 64,680 electric customers in South Dakota.
Fiegen lauded the efforts of both South Dakota Public Utilities Commission staffers and NorthWestern Energy for working together for the benefit of South Dakota consumers.
"You guys worked together to reduce the amount you requested, and staff and NorthWestern reduced it by over 30% of what was requested," Fiegen said.
The need for the rate increase stems primarily from three points, including NorthWestern's addition of the Bob Glanzer Generating Station to its generation fleet, approximately $267 million in investments since the company's last rate review filed in December of 2014 and changes in depreciation rates based on a new study as well as the inclusion of deferred tax assets in rate base.
Members of the commission and representatives from NorthWestern discussed some of the finer points of the request at the meeting, but by the time of the vote, commissioners seemed pleased with the process and the details of what the funds gained from the increase will go toward.
Nelson read from a commission staff memo that summed up the process and how it resulted in a lower rate increase request than might have otherwise been the case.
"It should be noted that for most of the issues in this case, NorthWestern's initial position on the issue was identical to how the issue was settled in the company's last rate case, docket EL14-106. This was greatly appreciated by (PUC) staff, as it made for more efficient processing of this rate case," Nelson read. "In addition, this means that NorthWestern's requested increase was smaller than it would otherwise have been. This results in a lesser reduction from the proposed request to the settlement determination than we have generally seen in other cases."
Nelson also praised the company's focus on improving its infrastructure, particularly with the Bob Glanzer Generating Station, a 58-megawatt natural gas plant in Huron that was completed in 2022. The plant is what is known as a dispatchable energy plant, meaning it essentially can be turned on or off as needed and can boost the power grid when demand rises.
That kind of flexibility is important, especially in South Dakota where energy demands can change on a dime with the weather. He noted that the upcoming weekend, when high temperatures are expected to hover around zero degrees, is a good example of that.
"A large portion of this increase is because NorthWestern has chosen to make an investment in dispatchable energy in the Bob Glanzer plant. We see a lot of other utilities making a lot of investments in generation that is not dispatchable, and there is a good place and economic reason for that, but we need dispatchable generation," Nelson said. "There was a discussion about how much Bob Glanzer is running. I'm telling you, this weekend Bob Glanzer will be running full out because people want to stay warm where it's cold. So we're appreciative of the fact that you're willing to make those kinds of investments to keep your system reliable."
Jo Dee Black, a spokesperson for NorthWestern Energy, told the Mitchell Republic that the rate increase will allow the company to continue to provide quality service at a reasonable price to South Dakota customers.
"Our previous electric rates in South Dakota were set using cost information from 2014. Since then, NorthWestern Energy invested about $267 million in our South Dakota electric infrastructure. The Bob Glanzer Generating Station has been serving our South Dakota customers since May of 2022, and we are really glad to have it right now with this winter weather coming in," Black said. "It's a fantastic resource that is 24-7 on-demand generation."
In addition to the Huron plant, Black said NorthWestern has continued to make improvements by updating its substations, transmission systems and switchyards. To maintain quality rural service, the company continues annual inspections of distribution poles and underground cable, replacing such when needed.
Black said the company realizes the rate increase comes at a time when other factors in the cost of living are also high.
"We certainly understand that this rate change is coming at a time when some of our customers are facing challenging times. Nobody wants to see rising electric bills," Black said. "But we're committed to providing reliable, sustainable energy service at the most affordable rates possible. The reason we asked for this regulatory review is to ensure that our customers continue to be served by a financially-sound company that is capable of efficiently funding the significant capital expenditures needed to maintain, expand and modernize our electric energy infrastructure."
Black encouraged NorthWestern Energy customers concerned about their ability to pay their bills to reach out to the company for flexible payment options and to visit northwesternenergy.com for more information on reducing electricity costs via conservation.
Following the vote, Fiegen also said she was pleased with the work between the commission and NorthWestern in working toward final approval.
"I appreciate you looking out for 64,000 customers in our state and making sure we have reasonable rates but also that you are looking at the future and building infrastructure that will keep the lights on in the future," Fiegen said.
The approved rate increase was expected to go into effect Wednesday, Jan. 10.
