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Montana PSC Limits LDC Rate Increase

Fortnightly Magazine - July 1 1996

The Montana Public Service Commission (PSC) has authorized Montana-Dakota Utilities Co., a natural gas local distribution company (LDC), to increase rates by $1.008 million. The increase includes an allowance for return on common equity of 12 percent. The PSC permitted the new rates to enable the LDC to recover the entire nongas cost increase from the residential customer class. It refused, however, to approve rate rebalancing to shift an additional $1.5 million of revenue requirement to the residential class without a thorough study of both gas and nongas costs.

The PSC also rejected an LDC proposal to decrease test-period operating revenues by nearly $1 million based on observations that use-per-customer had been declining and appliance efficiencies increasing. The PSC found that the LDC's linear regression analysis did not represent a known and measurable change to test-period figures, merely a prediction.

The PSC also rejected a proposal to alter existing tariffs to permit automatic shutoff of a customer's interruptible standby service gas supply unless the standby service is provided by the LDC. The LDC had claimed that automatic shutoff was required to stop the flow of interruptible gas to customers that rely on gas marketers. The PSC added, however, that the LDC should not allow marketers or pipelines to use the shutoff equipment to activate any independent rights they may have to interrupt loads unless a tariffed rate exists for such service. Re Montana-Dakota Utilities Co., Docket No. D95.7.90, Order No. 5856b, Apr. 11, 1996 (Mont.P.S.C.). t

Philip S. Cross is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.

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