The Trump tax cuts are expected to generate $14 million in savings to NorthWestern Energy, which is proposing giving a portion of the money to customers, while spending the rest on tree trimming.
Montana’s largest utility filed its plan Friday for dealing with the tax savings. The state Public Service Commission will decide later this spring whether to approve the proposal.
The tax savings stem from the Republican Tax Cuts and Jobs Act, which Congress passed in December and was signed into law by President Donald Trump. Federal corporate tax rates fell from 35 percent to 21 percent.
Regulated utilities like NorthWestern cannot pocket the savings, which must be shared with ratepayers, who also pay the utilities' taxes. NorthWestern has about 345,000 customers in Montana.
NorthWestern is proposing that its natural gas customers receive direct refunds for the entire $3.154 million in tax breaks associated with the utility’s natural gas business. The company’s electric customers would receive half of the $10.8 million in tax breaks associated with NorthWestern’s electric business. Half the money would be spent removing hazard trees that pose a fire or outage risk.
“With what we proposed, for a natural gas customer, it would be about $1.18 a month. An electricity customer would be 67 cents per month,” said Butch Larcombe, NorthWestern spokesman.
NorthWestern told the PSC the proposed combination of rebates and tree trimming would benefit NorthWestern customers while keeping the company’s net income whole. The company said it was “significantly harmed by the $14.043 million reduction in cash flow” from the tax cuts, which would concern investors.
Utilities in other states have also proposed spending their tax savings on tree clearing. NorthWestern said its proposal was most similar to tree clearing plans by utilities in Florida, where damage to trees from hurricanes and tropical storms is a real problem.
In Montana, the threat to power lines outside the utility’s right of way comes from forested areas damaged by mountain pine beetles. The utility clears trees within its right of way for 40 to 100 feet, NorthWestern reports, but there are trees outside the right of way that should also be cleared.
The company estimated that it has 1,030 miles of hazardous trees.
In December, Public Service Commissioner Roger Koopman said commissioners are likely to be “strongly inclined toward ratepayer refunds.”
The public will get a chance to weigh in before the PSC decides what’s to be done with NorthWestern’s tax break. The Montana Environmental Information Center has suggested NorthWestern invest the tax savings in Colstrip, where the utility has a stake in a coal-fired power plant, which is winding down.
Two of the four units at Colstrip Power Plant will close in the next five years. Four of the six utility owners in the remaining two units are gearing up to be financially ready in the next nine to 12 years for closure.
Last week, Avista Corp. of Spokane, Washington, announced that it would use part of its tax break to become financially ready by 2027 for Colstrip's closure, though the utility didn’t include a hard shutdown date in its plans.