Last updated: January 2017
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Montana's electric and gas universal system benefits charge (USBC) funds rate assistance through different programs operated by most of the state's utilities.
In 2015, state utilities spent about $4.7 million of USBC funds for low-income rate assistance. LIHEAP-eligible customers of NorthWestern Energy (NWE), the state’s largest utility, receive a 25 percent discount for electric usage from November through April and a 15 percent discount from May through October. NWE’s eligible natural gas customers receive a 30 percent discount from November through April. NorthWestern Energy spent over $3.1 million on its low-income electric discount in 2015, which assisted 11,629 households, and $668,306 for 7,500 eligible gas accounts.
NWE and most of the larger utilities operate their assistance programs in coordination with the LIHEAP and weatherization delivery network. For example, the state LIHEAP office flags LIHEAP recipients that are NWE customers, sends this information to the utility and these customers are automatically enrolled in NWE’s discount program.
Other utilities, including the state's electric cooperatives, also collect the USBC, and their rate assistance programs totaled over $640,827 in 2015.
The cooperatives are required to report their USBC expenditures, but don't report the number of households served. Several of the cooperatives have electric bill discounts for seniors and disabled persons, and income eligibility is determined through local LIHEAP administering agencies. Others don't have formal programs, but provide help with electric bills through a variety of initiatives, including emergency assistance and contributions to the statewide fuel fund.
Energy Share, a state-wide fuel fund that provides emergency bill assistance, also receives USBC funds from some utility companies. In 2015, Energy Share received $724,943 that provided bill assistance to 2,310 households.
Montana law requires that the USBC fund energy efficiency programs. NorthWestern Energy, smaller utilities, and some of the electric cooperatives fund low-income efficiency activities.
NWE operates its Free Weatherization Program (FWP) in coordination with the state's Weatherization Assistance Program. The 2015 FWP pooled 2013, 2014, and 2015 electric USBC funds, in addition to 2015 natural gas funds, to provide over $2.15 million for weatherization measures for 311 homes. Per order 6679e, issued by the Montana Public Service Commission (PSC) in 2008, NWE can pool money from its gas and electric USBC for the FWP.
The FWP includes a comprehensive energy audit, insulation of air-sealing, hot water conservation, compact fluorescent light bulbs, CFLs and energy-related health and safety improvements such as heating equipment tune-ups and repairs, and fuel switching.
Other utilities, including the electric cooperatives, provide funding through the USBC for furnace repair and replacement and other weatherization activities. In 2015, cooperatives and other utilities spent an estimated $425,692 for low-income energy efficiency initiatives for 2311 households.
Montana's low-income programs are among the oldest in the country. Energy advocates in 1977 sought "lifeline" rates — a basic allotment of electricity to low-income customers at an affordable rate — claiming that because large industrial customers received such rates there should be a similar allowance for the poor, the disabled, and the elderly. While they did not have immediate success, the state's largest utility (then called Montana Power, now NWE) began a low-income weatherization program in 1984 and a low-income discount in 1991.
The programs were continued through Montana's 1997 restructuring legislation, which established an electric USBC on all electric customers to fund efficiency programs for all customer classes, including funds for low-income energy assistance and conservation. Beginning January 1, 1999, the law required all utilities to set aside 2.4 percent of their retail sales revenues (based on 1995 levels) to fund "energy conservation, renewable resource projects and applications, and low-income energy assistance" through July 1, 2003.
The 2001 legislature extended the USBC through December 2005, and the 2005 legislature extended it through 2009. The 2009 legislature removed the termination date, and the PSC, through Order 6679e in December 2008, made it permanent. The average NWE residential customer using 750 kWh per month pays about $1 per month for the electric USBC.
A minimum of 17 percent of the system benefits pool must be spent on low-income energy and weatherization assistance. Electric cooperatives were required to participate in the universal system benefits portion of the law. SB 11, passed in 2015, exempted public utilities with fewer than 50 customers from assessing a charge.
During the 1997 restructuring process, Montana also passed legislation restructuring its gas industry and establishing a gas USBC, which all natural gas transmission or distribution service providers began charging to all end users in May 1997. SB10, passed in 2015, exempts gas utilities with fewer than 200 customers from assessing a USB charge.
At the time the USBC was created for gas customers, a natural gas utility's annual funding requirement for conservation and low-income energy bill assistance within the USBC was 0.42 percent of the utility's 1995 revenue. In 2007 this was changed so that the requirement is now a minimum of 0.42 percent of a utility's previous year's revenue. It has also been made permanent. Both the electric and gas utilities can receive credits for internal programs or activities that qualify as universal system benefits programs.
The majority of the electric and gas USBC comes from NWE customers. In February 1999, the PSC ruled that 21 percent of that total would be allocated among low-income weatherization, bill payment assistance, small low-income renewables projects, outreach, and Energy Share. The 21 percent allocation for low-income purposes is an increase in the floor amount of 17 percent set in the restructuring legislation.
Since 1999 NWE's low-income spending as a percentage of its electric USBC has averaged 32 percent annually. In 2015, SB 150 established the minimum annual funding requirement for low-income energy and weatherization assistance at 50 percent of the utility's annual USBC funding level.
In 2014, NWE spent about 38 percent of the electric USBC for low-income activities. The residential sector contributed about 34 percent of USBC revenues; commercial and small industrial customers, 36 percent; and large industrial customers, 30 percent.
NWE spends about 75 percent of the gas USBC on low-income activities; the remaining funds go toward general conservation activities. The gas discount has fluctuated, but has been at 30 percent from November through April since 2005.
Historically, the rural electric cooperatives have collected about $9 to $10 million through the USBC, and low-income expenditures have comprised between 10 to 13 percent of the total.
On May 1, 2013, the PSC began an investigation regarding USBC programs and funding. It solicited comments from stakeholders and held a roundtable later in the year. The commission received comments from utilities, consumer and environmental groups, and representatives from the community action agencies that receive USBC funding for low-income energy assistance and weatherization activities. In a report issued early in 2014, the PSC reported that most stakeholders supported continuation of existing USBC funding and policies and no major changes were recommended.
Additionally, in 2014 the program underwent a performance audit by the state Department of Revenue. The audit suggested changes regarding the PSC’s oversight and reporting requirements of large customer's USBC expenditures, but there were no major findings or recommendations pertaining to the low-income programs funded by the USBC.
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