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South Dakota Regulators Approve Natural Gas Rate Hike for NorthWestern Energy

Customers Will See $6.44 Monthly Increase Starting in January

South Dakota’s Public Utilities Commission has approved a 7% natural gas rate hike for NorthWestern Energy, but with a reduction in the original proposal. The approved increase, which will begin in January, comes after regulators modified NorthWestern’s initial request for an $8.38 monthly hike to $6.44 for the average residential customer. This move comes as the company justifies the increase due to rising operational costs and years of infrastructure upgrades.

NorthWestern Energy, which serves roughly 49,800 natural gas customers across the state, had last raised its natural gas rates in South Dakota back in 2011. With this new increase, the utility’s annual revenues from natural gas will grow by $4.6 million, down from the original $6 million that was initially proposed. While customers will face higher bills, the hike is expected to raise the average residential customer’s annual natural gas costs by about $77.

Reasons Behind the Rate Hike

The rate hike comes after NorthWestern Energy requested a significant increase to cover both rising operational costs and investments in infrastructure made over the last 13 years. The company’s operations have faced inflationary pressures, and the cost of maintaining and improving its pipeline systems has added up over time. The approval of this rate hike comes at a time when inflationary trends are affecting utilities across the country, prompting rate increases for natural gas, electricity, and other services.

natural gas rate increase

While the increase is lower than what NorthWestern had originally proposed, customers will still feel the pinch. The average residential natural gas bill will rise by an estimated $6.44 per month, which totals about $77 annually. The company, which provides energy services across much of the state, says the hike will help fund the costs of delivering natural gas safely and reliably.

Key Terms of the Settlement

The commission’s decision also included a significant stipulation: NorthWestern Energy will not be allowed to seek another rate increase for natural gas services until 2028, barring any “extraordinary events.” This rate moratorium was a major point of negotiation, offering some relief to customers who had been concerned about future hikes.

This settlement comes after the company’s earlier rate increase for electricity, which was approved earlier this year. The electricity rate hike, initially proposed at 11%, was reduced to a smaller 8% increase, ultimately raising the average customer’s electric bill by $13.67 per month. The new natural gas hike marks a continuation of NorthWestern’s efforts to balance rising costs with the financial demands of maintaining its infrastructure.

Impact on South Dakota Residents

For South Dakota residents, the rate hike may not come as a surprise. In recent years, utilities have raised rates in response to inflation, rising costs of labor, and necessary infrastructure improvements. But the reduction from the original request shows that regulators are willing to take a more cautious approach when approving such hikes, especially when customers are already facing higher costs for other utilities.

As NorthWestern Energy moves forward with this rate adjustment, the company will need to manage both customer satisfaction and the financial needs of its business. Customers will undoubtedly feel the impact of higher utility bills, but the added cost may help ensure that energy services continue to run smoothly and efficiently in the state.

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