Montana Power Co. (MP) has asked the Montana Public Service Commission (PSC) for a $34.9-million (9.84 percent) electric rate hike, and a $12-million (10.45 percent) natural gas hike. It also offered a preferred alternative electric and gas rate plan.The alternative plan would serve as a transition mechanism to a more competitive environment, limiting additional rate filings through 1998 and reducing this year's request by $14 million for electric and $3.5 million for natural gas. The anticipated annual request for electric would be reduced by $20 million, and annual requests for the gas utility by $10 million. Overall, it would increase electric rates $27 million (7.6 percent) in May 1996, $11.4 million (2.97 percent) in January 1997, and $12 million (3.03 percent) in January 1988. Over the same time frame, gas rates would increase $8.4 million (7.6 percent), $5.1 million (4.3 percent), and $5 million (3.9 percent).
The alternative plan includes two cost-recovery components: 1) timely rate adjustments that include full recovery of state property taxes and federally mandated power purchases, and 2) rate increases by predetermined percentages to cover basic cost increases. The percentages would be tied to MP's business plans, which hold aggressive expectations for improvements in efficiency and cost reduction. If MP were to outperform its cost-control expectations, 75 percent of the increase in net income would be shared with customers.
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