Northwestern Energy: Please, Sir, Can I Have Some More?

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Bob has already touched on his feelings about the recent news about Northwestern’s very efficient profiteering at the expense of Montanans struggling to pay for heating bills in colder weather, but I thought it would be interesting to look back on the company in the past year or so.  Maybe we just misunderstand the difficulty of being a monopolistic energy provider.

As Robert mentioned, Northwestern saw a nearly three hundred percent increase in profits last quarter, the result of average Montanans dealing with the cold:

Mike Hanson, NorthWestern president and CEO, says the company benefited from an increased number of customers and colder weather.

Fortunately, Mr. Hanson probably doesn’t have to worry about the cold too much, as he can probably warm his house lighting money on fire. Hanson, you see, collected just over a million dollars in compensation last year, a fact not mentioned in the recent reporting about Northwestern’s profitability.

One doesn’t have to look terribly far to see how they may have increased profits so much. According to the Mike Dennison on July 13, they charge more for electricity than any other utility in the region:

NorthWestern Energy, whose latest rate increase was confirmed last month by state regulators, now has electric rates 20 percent higher than any other major utility in the region, an analysis by Lee Newspapers shows…That rate is 20 percent higher than the second-highest major utility electric rate in the region, which is 8.4 cents per kwh, charged by Black Hills Power in western South Dakota.
It’s also 70 percent higher than the region’s lowest-priced privately owned electric utility, which is Idaho Power Co., charging its customers about 6 cents per kwh.

On the bright side, while tripling their profits, Northwestern was crying to the PSC that it needed a rate increase, and they got it:

NorthWestern Energy customers will see a slight increase on their monthly bills.

That’s because a request for a 2% rate increase has been approved by the Montana Public Service Commission. The rate increase translates to $15 million per year for the utility company, trickling down to annual costs of about $18 more for electric customers and $25 more for natural gas customers.

Don’t worry, though, consumers, Northwestern promised the PSC that they would re-evaluate their need for increased rates in 2009:

As part of the deal, the company agreed to submit a new rate request in 2009, when the PSC can re-examine NorthWestern’s finances and adjust its rates.
Commissioners and their staff, however, questioned why they should take the deal largely on faith and ignore questions about whether NorthWestern needs any rate increase at all.

Even better for all of us is that this rate increase is kind of like a loan for the struggling power provider:

NorthWestern needs some additional cash flow to help finance investments in its utility operations, Wilson said, and the rate increase provides that money, sort of like a short-term loan.

I know it’s heartless to expect a good corporate citizen like Northwestern to fend for itself in the cold, hard world, but should monopolistic corporations really be receiving short term loans from average citizens, based on the promise that they will do they right thing in the future? Especially when the company is NorthWestern Energy? A company who avoided millions of dollars of tax liability in its bankruptcy, while paying millions to the men who ran the company into the ground?

Running NorthWestern Corp., one of Montana’s three largest utilities, has been a game of musical chairs since the company bought Montana Power Co. three years ago: a very lucrative game for top executives.

With the approval of the U.S. Bankruptcy judge, during the past three months NorthWestern has granted severance payments in stock totaling almost $17 million.

In all, NorthWestern set aside $44 million in stock to settle outstanding claims and lawsuits in its post-bankruptcy period.

It’s good to see that the most shameful economic trend of the past twenty years—the obscene transfer of wealth from poor and middle-class Americans to an emerging class of wealthy corporate managers is firmly entrenched at NorthWestern Energy.

That thought might help keep me warm this winter; it certainly heated up things today.

About the author

Don Pogreba

Don Pogreba is a eighteen-year teacher of English, former debate coach, and loyal, if often sad, fan of the San Diego Padres and Portland Timbers. He spends far too many hours of his life working at school and on his small business, Big Sky Debate.

His work has appeared in Politico and Rewire.

In the past few years, travel has become a priority, whether it’s a road trip to some little town in Montana or a museum of culture in Ísafjörður, Iceland.

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