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State PBF/USF History, Legislation, Implementation

Montana
Last updated: October 2011
Summary

Montana's 1997 restructuring legislation established an electric universal systems benefits charge (USBC), a portion of which funds low-income energy assistance and conservation. Beginning January 1, 1999, the law required all utilities to set aside 2.4 percent of their retail sales revenues (based on 1995 levels) to fund "energy conservation, renewable resource projects and applications, and low-income energy assistance" through July 1, 2003.

The 2001 legislature extended the USBC through December 2005 and the 2005 legislature extended it through 2009. The 2009 legislature removed the termination date and the Montana Public Service Commission (MPSC) through Order 6679e in December 2008 made it permanent.

A minimum of 17 percent of the system benefits pool must be spent on low-income energy and weatherization assistance. Electric cooperatives are required to participate in the universal system benefits portion of the law, although they can choose not to open their markets up to competition.

Montana also passed legislation restructuring its gas industry. This legislation established a USBC, which all natural gas transmission or distribution service providers began charging to all end users in May 1997. A natural gas utility's annual funding requirement for conservation and low-income energy bill assistance within the USBC was 0.42 percent of the utility's 1995 revenue. In 2007 this was changed so that the requirement is now a minimum of 0.42 percent of a utility's previous year's revenue. It has also been made permanent. Both the electric and gas utilities can receive credits for internal programs or activities that qualify as universal system benefits programs.

The lion's share of the electric and gas USBC comes from NorthWestern Energy, the state's largest electric and gas utility. In February 1999, the MPSC ruled that 21 percent of that total would be allocated among low-income weatherization, bill payment assistance, small low-income renewables projects, outreach, and Energy Share, a fuel fund that provides emergency bill assistance. The 21 percent allocation for low-income purposes is an increase in the floor amount of 17 percent set in the restructuring legislation. During 2010, NorthWestern spent 34 percent of the USBC for low-income activities; since 1999 low-income spending has averaged 31 percent annually.

The USBC covers NorthWestern's costs for a low-income rate discount provided by the company since 1991, along with low-income weatherization. That discount was increased from 10 percent to 15 percent in June 1999; currently it is 25 percent from November through April and 15 percent from May through October.

In 2010, the NorthWestern electric USBC generated $9.2 million. Of that, about $3.1 million was spent during 2011 or committed for expenditure during 2012 on low-income programs — payment assistance, the Energy Share fuel fund, and the free weatherization program. A total of 15,291 low-income customers received at least a 15 percent discount on their electric bills at a cost of about $2.6 million. No funds were expended for weatherization, but $195,000 was committed for that purpose during 2010.

Under the gas USBC, NorthWestern collected about $3.3 million during 2010 and spent $1.6 million on rate assistance for 10,113 households and $762,146 million on low-income weatherization for 691 households, with the remainder for non-low-income conservation. The gas discount, which had been at 15 percent since 2000, has been 30 percent from November through April since 2005.

The discounts are currently administered through the state LIHEAP and weatherization grantee, the Department of Public Health and Human Services. The state flags LIHEAP recipients for the discount, sends the information to the utility, and these households receive the discount automatically. The department also administers most of the weatherization funds, which are spent locally by community action agencies.

Low-income USBC expenditures by other Montana utilities (investor-owned and rural electric cooperatives) totaled over $2 million during 2010. Benefits included discounts for seniors and other low-income customers, weatherization, energy audits, furnace and water heater repair and replacements, arrearage forgiveness and contributions to the statewide fuel fund, Energy Share.

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Page last updated: October 31, 2011