NorthWestern Energy Customers to Receive Refunds After PSC Cuts Rate Hike by $43 Million

HELENA — NorthWestern Energy customers will see their rates reduced and receive refunds after the Montana Public Service Commission slashed $43 million from the utility’s request to recover costs for a new power plant in Yellowstone County.

The PSC announced its final decision Wednesday in NorthWestern’s 2024 electric and natural gas rate case, approving $246 million in new rate base for the Yellowstone County Generating Station—$43 million less than the utility requested.

Because NorthWestern self-implemented higher rates in May 2025 based on its original $289 million request, customers have been overcharged for the past six months. The PSC’s lower approval means customers will see reduced rates going forward and receive refunds with interest for the difference.

“The Commission’s responsibility is to strike the right balance—ensuring utilities remain capable of delivering safe and reliable service while protecting customers from paying more than what is just and reasonable,” Commission President Jeffrey Welborn said in a statement. “This decision, and the $43 million in savings for customers, demonstrates the value of a thorough public process and the dedication of our staff.”

The Commission determined that significant portions of NorthWestern’s original request were not supported by sufficient data, documentation, or technical justification.

Power plant approval moves forward

Despite the cost reduction, the PSC approved the Yellowstone County Generating Station, authorizing the utility to recover costs for the 175-megawatt natural gas facility that began commercial operations in March 2024.

The plant provides backup power during Montana’s coldest winter days when demand peaks and renewable energy sources may be unavailable. The facility can start up in less than eight seconds to support grid reliability during extreme weather events.

The power plant has faced sustained opposition from environmental groups, including ongoing litigation over its approval and permitting process.

16-month review process

The rate case conclusion follows a 16-month regulatory process that included extensive public participation and rigorous analysis by PSC staff and intervenors, including consumer advocates, tribal nations, large industrial customers, environmental organizations, and low-income service providers.

In response to concerns raised early in the proceeding, the Commission implemented increased procedural safeguards requiring written testimony for all settlements and ensuring all parties could ask questions and provide counter-evidence.

PSC staff conducted detailed technical analysis throughout the review, identifying unsupported cost components and evaluating the reasonableness of each element of NorthWestern’s request. Their work was instrumental in identifying the $43 million in costs the Commission ultimately found unjustified.

The PSC will now oversee implementation of the approved rates and ensure all required customer refunds are issued promptly and accurately.