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Consumer Counsel flags $37 million PCAM undercollection and raises questions about 90/10 sharing and Northwestern merger
Summary
At its Feb. 4 meeting, Montana Consumer Counsel staff outlined a roughly $37 million undercollection in Northwestern Energy’s PCAM tracker, urged clarity on how 90/10 sharing is applied, and said the Counsel is investigating merger conditions and data-center supply proposals tied to additional Colstrip capacity.
Consumer Counsel staff reviewed several Northwestern Energy dockets on Feb. 4, saying the annual PCAM (power costs and credits adjustment mechanism) tracker shows an approximately $37,000,000 undercollection for the tracker year that runs July 2024 through June 2025. Counsel filed testimony seeking a $7,000,000 reduction tied to adjustments to the PCAM base and to how sharing is applied.
"PCAM is the power costs and credits adjustment mechanism," Mr. Brown, Consumer Counsel staff, said, answering a member's request for a definition. He told the committee the undercollection reflects supply costs — fuel at utility-owned plants and market purchases — and lower-than-expected output at the Yellowstone plant during the period.
Why the 90/10 sharing rule matters: Brown explained the commission has adopted a 90/10 sharing mechanism in which only 90% of an over- or undercollection is refunded or collected, creating strong pressure to set the PCAM base correctly in rate cases. "If they under-collect, they only get 90% of the difference," Brown said, describing the incentive structure and the commission’s recent decision to temporarily suspend the sharing rule while it considers a separate docket on the policy.
Counsel asked the committee for time to circulate exhibits and a simple example showing how the sharing and tracker calculations have affected customers over multiple years. Committee members requested a short, illustrative table from staff showing year-by-year over/under results and the cumulative effect of sharing.
Merger and data-center concerns: Brown also updated members on a Northwestern–Black Hills merger docket. He said counsel is conducting discovery and will consider recommending conditions (commonly known as "ring-fencing") intended to keep books, debt and operations sufficiently separate so Montana ratepayers are insulated from corporate actions elsewhere in the holding company structure.
Brown warned that additional generation control (Northwestern would control roughly 55% of Colstrip if all proposed shares consolidate) raises policy questions about whether large new loads such as data centers should be served through regulated tariffs or via unregulated affiliates and contracts. He said environmental groups have petitioned the commission, asking it to prohibit Northwestern from selling supply to data centers until the commission determines there would be no adverse impacts on existing customers and to require a separate rate class for such large loads.
What happens next: Counsel will circulate testimony and exhibits and draft a simple exhibit illustrating the effects of 90/10 sharing over time. The commission also has motion(s) for reconsideration and additional procedural filings pending in the related rate dockets.
