Retail Unbundling

Retail Unbundling - Montana
Home > Natural Gas > Natural Gas Residential Choice Programs > Montana

Status: The State has two pilot unbundling programs for residential gas customers.

Overview: Two local distribution companies (LDCs) in Montana, serving about 70 percent of the State's residential customers, initiated customer choice pilot programs in the late 1990s. Montana Power Company (now doing business as Northwestern Energy) began its program in November 1998 and offered natural gas supplier choice to approximately 11,000 of its residential and small commercial customers. Energy West, Inc. (doing business in the State as Energy West Montana) began its program in October 1999, which is open to all of its residential and small commercial customers.

According to the Montana Public Service Commission, there were very few participants in the choice programs in 2009. The Natural Gas Restructuring and Customers Choice Act was passed in 1997. Under this act, gas utilities may voluntarily offer their customers a choice of supplier. Customers served by LDCs that have implemented customer choice programs were to choose a nonutility gas supplier by 2002, but the date has been extended indefinitely. Currently, there are four marketers licensed as residential gas suppliers in the State.

EIA State Data: In 2008, Montana had 253,122 residential and 33,008 commercial customers. They consumed approximately 22 and 14 billion cubic feet of natural gas, respectively. The average prices residential and commercial customers paid for natural gas from local distribution companies were $11.45 and $11.32 per thousand cubic feet, respectively.

Regulatory and Legislative Actions on Retail Unbundling

Summary: The Natural Gas Restructuring and Customers Choice Act, passed in 1997, allows natural gas utilities to offer their customers a choice of supplier and provide open access to their transmission, storage, or distribution facilities. All utilities providing customer choice must unbundle services and remove natural gas production and gathering from the rate base. The Montana Public Service Commission (PSC) adopted several rules to implement the legislation and guide the transition to a competitive retail natural gas market. In December 2004, the PSC approved Energy West Montana's request to remove the limitation that allowed customers to move to open access only during a specified “open season.” As a result, Energy West Montana's customers can choose supplier service or return to utility service at the beginning of any billing cycle.

Eligibility and Participation in Retail Choice Programs:

Eligibility and Participation by Customer Class, December 2009

Customer Type	2008 Customer Total	Eligible 2009		Participating 2009
Customer Type	2008 Customer Total	Total	Percent of 2008 Customer Total	Total	Percent of Eligible	Percent of 2008 Customer Total
Residential	253,122	36,065	14.2	457	1.3	0.2
Commercial	33,008	24,636	74.6	150	0.6	0.5
Total	286,130	60,701	21.2	607	1.0	0.2
-- = Not applicable. Sources: 2008 Customer Total: Energy Information Administration (EIA), Natural Gas Annual 2008 (March 2010). Eligibility and Participation: Montana Public Service Commission and EIA estimates (March 2010).

Regulatory and Legislative Actions

Legislation	04/09	Act allowing restructured gas utilities to acquire production and gathering resources and include them in the rate base, HB294, signed April 1, 2009. The law establishes procedures for the acquisition and inclusion of the resources in the rate base. Production and gathering assets cost of service may not be allocated to a customer being served by an alternative natural gas supplier.
	05/97	Natural Gas Utility Restructuring and Customer Choice Act, SB396. The 1997 Montana Legislature enacted the "Natural Gas Utility Restructuring and Customer Choice Act," which became effective 5/22/97 (Ch. 506, L. 1997). The law allows competition for the supply of natural gas and electric service and permits regulated utilities to file restructuring plans. The Montana Public Service Commission (PSC) is to adopt rules to implement the new laws.
Regulatory Action	12/04	Approval of Energy West Montana's interim rates, gas cost tracking procedures, and choice selection or cancellation times (Docket D2003.6.75, Order 6552a). The PSC approved Energy West Montana's request to separate its Great Falls and West Yellowstone areas for cost tracking purposes and to remove restriction that customers can select alternative suppliers only during an open season period. Customers can move to a third-party supplier or return to utility service at the start of the billing period.
	06/99	Rules adopted regarding customer information and protection. Suppliers must obtain written authorization from consumers and provide a contract specifying service terms before switching suppliers. All contracts must have a "uniform information label" to allow consumers to compare price and contract terms. Other rules cover service disconnections, complaint procedures, billing, and supplier of last resort provisions.
	12/98	Approval of Great Falls Gas Co. (now doing business as Energy West Montana) restructuring, Docket D98.3.68, Order 6064b, Final Order. The PSC approved open access and customer choice on Great Falls' system. Full choice for residential and small commercial customers is set to begin on 10/1/99, with open season starting 5/1/99. By the end of the second year of choice, Great Falls is to file a plan for assigning customers who have not chosen a supplier.
	09/98	Hearing on Great Falls Gas Co. proposed choice program. In March 1998, Great Falls Gas Co. filed a restructuring plan that would unbundle services for its residential and small commercial customers. Customers would have until October 1999 to choose a new gas supplier or continue traditional service with the supplier selected by Great Falls Gas. Great Falls would stop selling gas in October 1999 and offer only distribution and transportation services. Stranded costs would be assigned to its affiliate Energy West, which would provide management services for 5 years.
	08/98	Approval of Montana Power Company's (MPC) pilot program application, Docket D98.2.28, Order 6061a. The PSC approved MPC's plans for a pilot choice program as specified in PSC's final order on 10/97. The program will begin November 1998 and offer natural gas supplier choice to approximately 11,000 residential and small commercial customers (up to 0.5 billion cubic feet of MPC's annual load). All MPC customers are to choose gas suppliers by July 1, 2002.
	06/98	Natural gas restructuring rules. The PSC adopted rules to implement the Natural Gas Utility Restructuring and Customer Choice Act. The rules cover utility restructuring, provider conduct, supplier licensing, and universal system benefits programs. Gas suppliers must be licensed by the PSC, maintain an electronic registration with the PSC, and submit annual reports on services provided, quality and reliability of service, and company organizational structure (affiliates, etc).