The South Dakota Public Utilities Commission approved a reduced rate increase for NorthWestern Energy’s natural gas customers in South Dakota at the commission’s regularly scheduled meeting in Pierre today, Dec. 17, 2024. The rate approved by the commission was presented in a settlement stipulation offered jointly by NorthWestern Energy and PUC staff. The rate change represents the company’s first natural gas rate increase request in 13 years. NorthWestern Energy requested a 9.1 percent total bill increase, and the commission authorized a reduced total bill increase at 7 percent.
The commission’s actions came after a nearly six-month analysis of NorthWestern Energy’s request to increase rates for its South Dakota natural gas customers to generate approximately $6 million in additional annual revenue. After engaging in extensive discovery and settlement discussions, NorthWestern Energy and PUC staff were able to reach a settlement agreement with an overall revenue deficiency of $4,599,335. This result reduced the company requested 30% base rate increase to the granted 23.5% increase which results in a 1.8% increase per year since the last rate case. As a result, a typical residential customer using an average of 100 therms per month will see an increase of $6.47 in their monthly bill.
“NorthWestern has met the requirement to provide safe, reliable service at reasonable rates,” stated PUC Chairperson Kristie Fiegen. “The rates paid by South Dakota families are well below the national average,” she said.
The approved settlement agreement includes many terms designed to balance the interests of NorthWestern Energy and their South Dakota customers. As part of the settlement, NorthWestern agreed to a rate moratorium preventing the company from requesting an increase in base rates effective prior to Jan. 1, 2028. Parties also agreed to increase the residential customer service charge by $2.00 per month.
PUC Vice Chairman Gary Hanson noted the process by the PUC staff and NorthWestern representatives that arrived at the settlement agreement. “I am certain there was give and take in the discussions, and even some arm twisting. The settlement reflects a tremendous amount of work.”
NorthWestern Energy’s last base rate increase for natural gas customers was filed on May 20, 2011. The company states a rate increase is necessary to ensure that customers will continue to be served by a financially sound company with access to low-cost capital to continue efficient investments that ensure reliable, safe energy service for customers.
“The rate increase is reasonable and fair,” said PUC Commissioner Chris Nelson. “It is very commendable that NorthWestern stayed out of the rate increase arena for 13 years given the amount of investment made to continue to provide safe and reliable service,” Nelson said.
NorthWestern Energy submitted its application to the PUC on June 21, 2024. New rates will go into effect for natural gas customers in the company’s South Dakota territory on Dec. 19, 2024.
The full docket can be viewed on the PUC’s website at puc.sd.gov, Commission Actions, Natural Gas Dockets, 2024 Natural Gas Dockets, NG24-005 – In the Matter of the Application of NorthWestern Energy Public Service Corporation dba NorthWestern Energy for Authority to Increase Rates for Natural Gas Utility Service in South Dakota.