Commissioners also chose to put off for another year a new accounting method that assures NorthWestern’s fixed costs are recovered but that the utility isn’t overpaid.
Those fixed costs are associated with things likes service, transmission and power plant expenses, which are fairly flat, unlike fuel costs which can vary. Residential customers would have been rebated $9.5 million this fall had the accounting method been in place, according to PSC analysts. The accounting method had been delayed a year at NorthWestern’s request at the start of the pandemic, which the utility argued was too unpredictable for trying a new accounting method.
This spring, NorthWestern asked the commission to put off the accounting method again, for another year, citing again the unknowns of the lingering pandemic. But PSC analysts said the pandemic didn’t create the unpredictability NorthWestern suggested. There were soft boundaries on conditions in which the fixed costs the accounting mechanism was expected to operate. During the pandemic, costs didn’t stray outside those limits. In other words, nothing happened at the electric meter that the accounting method couldn’t handle.
However, Commissioner Brad Johnson said the first year of the pandemic was so unusual it was hard to know how the new accounting method would work in the second year.
“From my perspective, Mr. Chairman, the sheer magnitude of the anomalies that were in place over this last year dictate that taking another year to implement this program would be prudent so that we can have, I think, a more accurate understanding of the impact of policy,” Johnson said.