Boston, MA 06/18/2014 (wallstreetpr) – NorthWestern Corp (NYSE:NWE) has got the privilege to recoup its costs through rate hikes thanks to the approval of the same by the Montana utility regulators.
The company seeks to recover $32 million in underestimated costs. It will exercise its 6.44 percent rate hike starting July 1. The rate hike approval is on an interim basis.
The Montana Public Service Commission voted 4 – 1 in favor of the interim rate hike. The dissenting Commissioner Travis Kavulla questioned how the company could have underestimated costs by such a big margin.
However, the majority of the commissioners saw no big deal in the issue, but promised to investigate the details with the possibility that they can ask a refund on the money if the findings prove the contrary.
Basis of the added cost
NorthWestern Corp (NYSE:NWE) put its case before the regulators that it incurred higher costs over the last 12 months than was estimated for the period. The company cited the costs of two power generation facilities and the fact that it had to buy electricity on the market to meet the loss of supply from the Colstrip power unit that went offline for about six months.
In that case, the company saw its cost going beyond the estimates although that was necessary so that it could continue meeting the electricity needs of its customers. The company reported $32 million in added costs of which about $11 million is linked to the Colstrip plant, which went offline for the better part of the past 12 months.
In the best interest of shareholders
In passing a favorable verdict in the case of NorthWestern Corp (NYSE:NWE), the commissioners observed that denying the company the opportunity to recoup its costs would send a negative message to the investors. Nonetheless, the commission has the courage and backbone to reverse the rate hike if investigations reveal that it lacks merit.
NorthWestern Corp (NYSE:NWE) serves about 300,000 customers in Montana. The company generated revenue of $369.70 million in the most recent quarter. The revenue was almost 18 percent above the revenue figure realized in the same period a year earlier.
