Pakistani energy officials visit PSC

Hassan Mehmood, Director of Pakistan's Ministry of Petroleum & NR questions Public Service Commissioners Tuesday

Hassan Mehmood, Director of Pakistan’s Ministry of Petroleum & NR questions Public Service Commissioners Tuesday

Montana Public Service Commissioners Bill Gallagher and Kirk Bushman hosted a discussion Tuesday with high-ranking officials from Pakistan’s energy sector.

The eight Pakistanis are visiting the U.S. through the State Department’s International Visitor Leadership Program. The group is examining U.S. energy policies to gather ideas for improving Pakistan’s infrastructure. The country of 180 million people is wracked by power outages impacting entire cities and more on a regular basis. It also commonly suffers from shortages of commodities like natural gas.

The Pakistanis compared how the two countries organize utilities with the PSC. During the hour-long discussion,Pakistan’s Ministry of Petroleum Director Hassan Mehmood asked chairman Gallagher why the state doesn’t require Public Service Commissioners to have special education in a field related to utilities.

Gallagher said that is a challenge of the Montana system—but he says the PSC has that relevant experience on staff and, in the end, the elected commissioners are there to take the votes on subjects like rate changes.

“There’s a steep learning curve,” Gallagher said, “but we’re elected to be the ears and the eyes of the common people.”

The group is also learning about U.S. efforts to address the impacts of climate change and the Pakistanis are paying close attention to the American natural gas boom—in the Bakken and other shale formations.

Pakistan has a natural gas shortage right now, and Petroleum Ministry Director Hassan Mehmood said whether America decides to export its natural gas or not—it could bring prices down for his country.

“We are of the firm view that at least U.S. will not be importing gas, and that gas will become surplus and the suppliers will have to dispose of that gas for the other buyers and Pakistan can be one of the buyers,” Mehmood said.



What NorthWestern’s major infrastructure upgrade project means for utility rates

A worker contracted by NorthWestern Energy replaces underground electric cables in Helena

A worker contracted by NorthWestern Energy replaces underground electric cables in Helena

NorthWestern Energy is rolling out the major phase of a seven-year, $375 million infrastructure upgrade project this year, and it has already led to an increase in some utility rates with more potentially on the way.

NorthWestern’s Distribution System Infrastructure Project (DSIP) started in 2011, but the first two years were mostly preparatory. This year, NorthWestern employees and contract crews will be working across the state replacing electric poles and underground gas and electric lines, installing new meters and other technologies, and trimming lots of trees. $66 million will be spent on the project this year alone.

“This is the work that we believe is needed to be done to avoid potentially greater costs down the road,” said NorthWestern CEO Bob Rowe. Much of the infrastructure being replaced was installed in the 1970s and has reached the end of it’s useful life. Rowe said the company is trying to get ahead of problems which would lead to a less reliable grid in the future.
In a press release, NorthWestern Energy spokesman Butch Larcombe said:

Some of the work will involve our customers. More importantly, customers will be asked, via the PSC rate process, to pick up some of the tab for the work. 

As Lee Newspapers Reporter Mike Dennison writes, The Montana Public Service Commission recently adopted higher natural gas rates, to help pay for the DSIP project. Dennison writes that increase is actually lower than a 5.4 percent temporary increase approved last year–but is 4.6 percent higher than the gas rate before the temporary increase was approved. It’s the first permanent gas rate increase for NorthWestern since 2008.

NorthWestern CEO Rowe said the utility will not be seeking higher electric rates this year but may ask the PSC to increase rates in 2014. PSC Chairman Bill Gallagher believes that would be a reasonable request.

“Because the system is aging quickly,” Gallagher said, “It’s necessary at this juncture, I believe, to go in and put some money into repair and upgrade of that system.”

The Montana Consumer Counsel represents ratepayer interests in these discussions with the PSC. Rate Analyst Paul Shulz said the counsel could not comment specifically on potential electric rate increases, as NorthWestern has not formally filed for those increases yet. He says when and if that happens, the group will be looking closely at the proposal.

“Are they doing what they need to do to maintain the system or are they ‘gold plating it?’ Are they going beyond what’s necessary?” Shulz asked. “Are there costs in there that should be born by NorthWestern shareholders, for example, and not rate payers?”

He said it is too soon to answer those questions.