Energy

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 PSCs 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 NWEs 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 orders 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/ TD)
• 3.89 - supply only, inlcuding CTC-QF
• MDU
• 6.97 - per kwh energy 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 Qwests
  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
FCCs 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