Unpacking NorthWestern Energy's PSC beef 

David Hoffman didn't pull any punches when it came to the Montana Public Service Commission July 31. Standing before the Legislature's Energy and Telecommunications Interim Committee, he accused the commission's five members of having "lost their regulatory minds," and claimed several recent PSC actions had put NorthWestern Energy—where Hoffman works as government affairs director—in a serious bind.

"They're destroying existing law and they're out of control," Hoffman told lawmakers.

Near the root of Hoffman's dismay was a late-June decision by the PSC to reduce rates and contract lengths for energy generation projects. Small-scale solar developers were first to pillory the commission's vote, arguing that the 40-percent reduction in rates paid to them by utilities and the 10-year cap on those contracts would make it too difficult to secure financing.

Had the PSC's decision stopped there, Hoffman's voice might not have joined the choir of dissatisfaction. NorthWestern had, after all, requested a lower rate structure in spring 2016. But, Hoffman tells the Indy, the PSC didn't stop there. Instead, the commission extended the rate and contract reductions to utility-owned generation as well. Hoffman speculates that if the decision stands, NorthWestern will likely opt in the future to buy power on the open market rather than pursue new generation facilities in the state.

"Bottom line is it means loss of investment, loss of jobs, and exposure to the market for Montana customers," he says. Hoffman adds that his other primary concern was the PSC's apparent attempt to fast-track a comprehensive and lengthy review of NorthWestern's energy portfolio, which he acknowledges the commission has since abandoned.

Hoffman has sought to bolster his bluntly brutal characterization of the PSC by quoting recent reports from financial analysts cautioning investors to sell or reduce their NorthWestern stock holdings. In late July, the multinational holding company Credit Suisse downgraded NorthWestern to "underperform" based on increased regulatory risk. The Williams Capital Group was slightly more candid, titling its July 31 equity research paper on the Montana utility "Ugggggggh, More MPSC Shenanigans."

PSC Chair Brad Johnson countered Hoffman's bluster with a measured response on July 31, stating simply that he disagrees with the scenario presented by those analysts. Vice-chair Travis Kavulla didn't play quite so nice in a guest editorial in the Billings Gazette this week, dismissing as "nonsense" any suggestion that the PSC is moving toward deregulation.

"NorthWestern's bad-mouthing of the PSC marks a change in company strategy," Kavulla wrote. "Rather than convince us, the monopoly is lobbying legislators to apply political pressure to us. This is inappropriate."

According to Hoffman, NorthWestern Energy was just one of several parties to formally request the PSC reconsider its decision. He says the commission could complete its review of those motions as early as Aug. 20.

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