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HELENA – The state Public Service Commission says NorthWestern Energy has overstated how much revenue it loses from energy-conservation programs – and therefore ratepayers shouldn’t reimburse the company for that amount.

The 5-0 decision, made final Tuesday, may result in $2 million to $3 million in savings for NorthWestern’s 325,000 electric ratepayers statewide, PSC staff estimated.

Commissioner Travis Kavulla, R-Great Falls, said overstating the lost revenue creates a windfall for the utility and that the PSC has an obligation to scrutinize how the amount is calculated.

“The credibility of energy-efficiency programs relies on the accurate amount of savings from those programs,” he said. “That’s what our job is, and that’s what we’re doing here.”

A company spokeswoman said the decision sends a mixed message on energy-savings programs, as NorthWestern is encouraged to promote them but then is denied recovering some of the resulting costs.

“It has a chilling effect on how we could potentially view these programs,” said Claudia Rapkoch.

An official with a leading environmental group also criticized the decision, saying the five-member PSC has signaled it’s hostile toward energy-conservation programs and will scrutinize them more closely than other utility expenses.

“I’m concerned that (NorthWestern) will be hesitant to make those investments in the future,” said Kyla Maki, clean energy director for the Montana Environmental Information Center.

The decision, several months in the making, focused primarily on how much revenue NorthWestern lost from 2006 to 2011 from promoting the use of energy-saving compact fluorescent light bulbs, or CFLs.

Customers’ electric rates already cover the cost of the promotions, but NorthWestern also seeks reimbursement for the cost of electricity not consumed because of higher CFL use.

The PSC didn’t vote to deny that entire reimbursement, but did find that a study funded by the company overstated how much electricity wasn’t consumed because of CFL use. The PSC said a portion of the reimbursements – which have already been paid from 2006-2011 – should be refunded to customers through a rate credit.

For example, the study calculated a certain “burn rate” for CFLs in use and also concluded that CFLs in storage would eventually be used, and therefore the company would lose revenue from their use.

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The PSC decided the burn rate, based on out-of-state data, was inflated, and that CFLs in storage should not be counted as CFLs that are being used.

The PSC order directs NorthWestern, using the factors approved by the PSC, to refile statements on how much revenue it lost. Once a final amount is approved, rates will be adjusted accordingly.

At a meeting of the PSC last month, Commissioner Roger Koopman, R-Bozeman, said ratepayers are “kind of the unwitting victim in all of this.”

“These programs simply do not work the way they claim to work, and they don’t do what they claim to do,” he said. “We’ve got these programs wrapped around the ratepayers’ neck; it’s unfortunate.

“We need to at least come up with a calculation that is fair to the company … but fair to the ratepayer.”

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