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Energy & Telecom Issues

Energy & Telecom Issues. Presented by PSC to the Energy & Telecommunications Interim Committee September 16, 2003. Preparation for NWE bankruptcy. PSC involved in ongoing discussions re: legal & technical issues related to utility bankruptcy. Coordinating with other agencies.

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Energy & Telecom Issues

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  1. Energy & Telecom Issues Presented by PSC to the Energy & Telecommunications Interim Committee September 16, 2003

  2. Preparation for NWE bankruptcy • PSC involved in ongoing discussions re: legal & technical issues related to utility bankruptcy. • Coordinating with other agencies. • Effective PSC involvement in bankruptcy will be expensive. PSC will seek budget amendment to pay for outside legal & technical support. • Explicit PSC statutory authority over utility sales and asset transfers as well as explicit PSC oversight of affiliate transactions would be helpful.

  3. PSC actions related to NWE financial condition • Ordered NWE to segregate USB public purpose funds in USB trust accounts. • Considering whether to similarly segregate payments into and out of default supply, including QF funds. • Continue to monitor compliance with PSC’s January financing order, as well as monitoring NWE service maintenance.

  4. PSC investigation of NWE • 8/22/03 – Upon request of MCC, PSC opens investigation of NWE’s transactions with NW Corp. and creditors that may impair its financial solvency and public utility service obligations. • Docket D2003.8.109 • Expedited procedural schedule

  5. PSC investigation of NWE • PSC will consider adopting measures to protect public interest such as: • Incorporation of NWE as separate, utility-only subsidiary of NW Corp. • Requiring NWE to use specific cost allocation procedures and manuals. • Implementing conditions on current & future financing involving NWE assets.

  6. PSC investigation of NWE • PSC order includes: • Detailed questions about NWE financial matters. (NWE responses received 9/8). • Requirement that NWE respond with legal argument and/or evidence to order’s proposals for measures the PSC might implement to protect the public interest. NWE may suggest alternative or additional measures. (NWE response received 9/9.)

  7. PSC investigation of NWE • NWE must demonstrate that any additional or alternative measures it proposes achieve these objectives: • Restore NW Corp. to financial health. • Achieve a balanced capital structure. • Protect ratepayers from risks of non-utility investments.

  8. Update on Rates

  9. Residential Electricity rates – • NorthWestern Energy (Default Supply)– • 7.34 ¢ - average total price per kwh (w/ T&D) 3.89 ¢ - supply only, inlcuding CTC-QF • MDU • 6.97 ¢ - per kwhenergy charge $3.00/month-base rate

  10. Electricity rates – MDU • 8/26/03 - MDU files its first electric rate case in Montana since 1986. • Seeks overall increase of 10.73%; proposed residential increase of 20%. • MDU proposes increase to recover investment and costs associated with new generation resource that serves MT customers, as well as other claimed increased costs. • Current residential rate: 6.968¢/kwh Proposed res. rate: 1st 750 kwhs: 6.884¢/kwh; Over 750 kwhs: 3.403¢/kwh Oct.-May; 6.884¢/kwh June-Sept. • Proposed increase in res. base rate charge from current $3.00/mo. to $17.00/mo.

  11. Natural gas commodity ratesMDU, Energy West, NWE • MDU, EW and NWE file monthly trackers. • MDU: Current residential rate = $6.784/dk • EW: Current residential rate = $6.924/mmbtu for first 9 mmbtus; $6.605/mmbtu over 9 mmbtus • NWE: Current residential rate = $8.007/dk

  12. Update re: NWE gas trackers • D2002.11.140 final order • Approved full 35% • Commission found NWE was imprudent in its procurement of gas supply • NWE appealed PSC order to district court • D2003.6.66 – interim order • Requested 45% increase • Approved approximately 35%

  13. PSC oversight re: utility assets • Explicit authority to review and approve utility corporate organization and affiliate transactions; • Explicit authority to review and approve the transfer of utility assets (not in the ordinary course of business); • PSC discretion and flexibility is key-one size PSC action in these matters does not fit all; but PSC must be able to act confidently when necessary.

  14. Updates on telecom, other issues • Rulemaking proceedings: • Adopted rules to implement HB 479, HB562, HB 392 – revisions to slamming/cramming law; bulk transfers of carriers’ customers; repeal of Universal Access Program. • Noticed proposed rules to implement HB641 related to intercarrier compensation.

  15. Extended area service (EAS) petitions in six dockets: • Qwest/Mid-Rivers/Project/Triangle: Musselshell/Billings region • Qwest/Triangle Co-op/Central Montana: Havre, Lewistown, Martinsdale, Great Falls regions • Qwest/Northern Telephone Coop: Shelby, Cut Bank region • Qwest/Blackfoot Telephone Co-op: Missoula, Helena regions • Ronan Telephone: Western MT EAS • Qwest/Lincoln Telephone Coop: Helena region

  16. Qwest retail rates investigation • Docket D2003.2.22 • PSC investigates the reasonableness of Qwest’s rates. • Recent annual reports show that Qwest earns well in excess of its 10.44% authorized rate of return. • Qwest refused to produce information requested by PSC; dispute is now in court.

  17. Eligible telecommunications carriers • PSC designates eligible telecommunications carriers (ETCs) that can receive federal universal service funds, and then certifies ETCs. Four pending dockets: • 3 Rivers/Qwest: Shelby • Western Wireless/Qwest: all exchanges • Interbel/Citizens: Eureka & Rexford • Mid-Rivers Cellular/Mid-Rivers Telephone/Range Telephone: Mid-Rivers Cellular Service Area • ETC Notice of Inquiry Issues: • Should PSC specify additional certification requirements in order to approve an ETC designation? • What criteria & procedures should be used to monitor and direct universal service funds to ETCs?

  18. FCC’s Triennial Review • FCC Order, effective 10/2: - Delegates to PSC Impairment (1996 Act) Analysis (loops, transport, switches etc) • Limits Time to Do Analysis 90 days for enterprise market 9 months for mass market • PSC opened two dockets • Collaboration and Training with ROC, NARUC and TRIP

  19. Universal service issues • Universal Service Fund Activities • 10th Circuit Remand • Federal State Joint Board • Definitions • Portability • Eligible carriers • Synthesis model • Federal funding for Montana (annualized 4th Quarter 2002): • Rural: $55.2 million • Non-rural: $10.9 million

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