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Montana utility has highest rates

Spokane residents pay least for power in survey of 6 states

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HELENA, Mont. — The residential electricity rates that NorthWestern Energy charges in Montana are the highest among a dozen utilities and cooperatives in six states, a survey has found.

Comparing household rates in effect this month, the Lee Newspapers' State Bureau found customers of Avista Utilities in Spokane, Wash., pay the lowest energy rates.

The 300,000 residential customers on NorthWestern's electric system in Montana pay 8.83 cents per kilowatt hour, up 6 percent from December and 50 percent more than rates that preceded the state's utility deregulation of the late 1990s. The 8.83 cents adds up to about $75 a month for the average household consumption of 800 kilowatt hours a month.

John Hines, director of energy supply for NorthWestern, said rates have risen because the company does not own power plants and buys practically all its electricity on the open market.

"If our resources hadn't been sold off by Montana Power Co., we would still be one of the lowest-cost utilities," Hines said.

Electric rates charged by NorthWestern and its predecessor, Montana Power Co., used to be in the middle of the pack, regionally. But since the full effects of the 1997 Legislature's deregulation law began in mid-2002, rates have risen to the top.

The State Bureau found most major electric utilities and co-ops in the region charge 6 to 7 cents per kilowatt hour.

Oregon's Portland General Electric ranks second in residential rates. That company charges 8.24 cents per kilowatt hour. Lowest-ranking Avista charges 5.1 cents.

The monthly bill for a Portland General Electric customer at 800 kilowatt hours is slightly higher than NorthWestern's, because the Oregon company has a per-customer monthly charge of $10, compared to NorthWestern's $4.78. But once consumption passes about 900 kilowatt hours, the monthly bill for NorthWestern customers is higher.

The State Bureau based its calculations on average monthly consumption of 800 kilowatt hours. A consumer's bill includes the charge per kilowatt hour and, typically, a flat monthly fee that varies from one utility or cooperative to the next. Some also have "tiered" rates, in which the charge per kilowatt hour increases with higher consumption.

Several utilities in the region have increased electric rates in the past two years. Half either reduced rates or held them steady since mid-2003.

Unlike NorthWestern, most utilities in the region own power plants that provide lower-cost electricity. After Montana passed its 1997 deregulation law, Montana Power Co. decided to sell its power plants.

"We're the only ones (in the region) who entered into this weird idea that selling off the hydroelectric system (and other plants) would reduce our rates," said state Sen. Ken Toole, D-Helena. "The bottom line is it made us a lot more vulnerable to markets that are full of profiteering and bad business practices."

Portland General Electric spokesman Scott Simms said that company and other Northwest utilities have been trying, in recent years, to buy or build generating plants and thus reduce exposure to the volatile wholesale market.