Montana

Restructuring Overview | Public Benefits | Restructuring Resources | Consumer Protection | News and Analysis

Legislation Passed
Electric Y Gas Y

Electric:
1997, SB390; Electric Utility Industry and Customer Choice Act

2001, HB474; Refined the orginial restructuring law.

Gas:
1997, SB396; Natural Gas Utility Restructuring and Customer Choice Act

Electric
Overview

• 1997: The Electric Utility Industry Restructuring and Customer Choice Act, was enacted in May. The bill included a 2-year rate freeze beginning July 1998. Beginning July 1, 1998, utilities were supposed to conduct pilot programs using a representative sample of their residential and small commercial customers. The date for full retail access was set as July 1, 2002.
• 1998: In June, the PSC approved a plan to phase-in competition. In July, Montana Power’s largest customers (loads over 1 MW) were allowed to choose their energy supplier. In November, 5% of residential and small consumers were able to select their power supplier under a pilot program.
• 2001: HB 474 allows customers currently being served by an alternate supplier to switch to default service. The Public Service Commission is responsible for ensuring that suppliers recover costs in their rates.
• 2002: In November, Montana voters chose to repeal HB 474. However, they rejected an initiative that would have allowed the state to buy back the dams sold by the Montana Power Company.
• April 2003: The legislature passed a measure that extends the restructuring law’s system benefit fund through 2005.  The legislature also approved a measure shielding NorthWestern Energy from a lawsuit brought be stockholders of the now-defunct Montana Power Company.
• May 2003: Governor Judy Martz signs bills extending universal system benefits charge rates by 2½ years through December 2005 and establishing a portfolio process for securing electrical supply for most of Montana’s residential and commercial consumers.
• September 2003: NorthWestern Corporation, parent company of Montana’s largest utility, NorthWestern Energy, declares bankruptcy.

Choice Status

• Voters' repeal of HB 474 in November 2002 returned the official choice date to July 2002. However, neither the PSC nor NorthWestern Energy has plans in institute electric competition.

Natural Gas
Overview

• 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 local distribution companies (LDCs) that have implemented customer choice programs are required to choose a non-utility gas supplier by 2002.

Choice Status

• Two local distribution companies in Montana, serving nearly 90 percent of the state’s residential customers, have initiated customer choice pilot programs. Montana Power Company (MPC) began its program in November 1998 and offered natural gas supplier choice to approximately 11,000 of its residential and small commercial customers. Great Falls Gas Company (now Energy West Montana) began its program in October 1999, and it is open to all of its residential and small commercial customers.

• Although the Montana Public Service Commission does not collect specific information on participation levels, it estimates that 0.05 percent (about 1,200) of residential and small commercial customers have signed up with alternative suppliers.

Choice education
Electric Restructuring
http://www.psc.state.mt.us/Energy/
This state website offers a wealth of information including:a searchable database of PSC dockets and orders pertaining to the sale of Montana Power Company, the extension period, the Universal System Benefits Plan and Charge, and the restructuring law; it also provides supplier licensing and reporting rules; consumer protection laws; and utility annual reports.

Explore Energy Choice
http://www.mtenergychoice.com/
This Montana Power Company website features a list of electric and gas suppliers, an energy choice calculator, and a sample bill from competitive energy suppliers.

Suppliers
http://www.mtenergychoice.com/residential/suppliers_residential.htm

Public Benefits

Montana’s electricity restructuring legislation established an electric universal systems benefits charge (USBC), a portion of which funds low-income energy assistance and conservation. Utilities must set aside 2.4% of their retail sales revenues (based on 1995 levels) to fund energy conservation, renewable resource projects and applications, and low-income assistance. Montana also passed gas deregulation legislation, which established a gas USBC that required 0.42 % of a natural gas utility’s annual revenue to be expended for low-income assistance and general conservation. The electric USBC amounts to about $14 million annually, with about $8.9 million used for energy efficiency programs, $1.8 million for renewable energy programs, and $3.3 million for low-income programs. The gas USBC amounts to about $3 million, with about three quarters spent on low-income programs. (Click here for details on the state’s low-income energy and general residential energy programs.)

Aggregation – buying coops

• SB406 is an act authorizing the formation of buying cooperatives to purchase electricity for residential and small commercial customers in investor-owned utility service territories in which those customers can choose an electricity supplier.
• Aggregators are included in the definition of electricity supplier. Electricity suppliers must obtain a license from the Public Service Commission.

State Restructuring Resources

Utility Regulatory Commission
Public Service Commission
1-888-215-4056
http://psc.state.mt.us

Consumer Complaints
1-800-646-6150
http://psc.state.mt.us

Consumer advocate
Montana Consumer Counsel
406-444-2771
http://leg.state.mt.us/consumer_counsel/index.htm

Grassroots groups
Montana Public Interest Research Group
406-243-2908
http://www.montpirg.org
The MontPIRG website includes a section critiquing electric deregulation in the state.

Montana Environmental Information Center
406-443-2520
http://www.meic.org/
This state environmental group sponsors the Citizens Council on Energy Policy, which works to promote clean, affordable, reliable, and efficient energy for Montana.

Consumer Protection

Disconnection policy

• Between November 1 and April 1, utilities cannot disconnect service to residential customers enrolled in any public assistance program or whose household contains at least one member who is over age 62 or disabled.
• Utilities cannot disconnect residential service when it is determined that such an action would aggravate a household member’s existing medical emergency.
• A competitive electric supplier may terminate a service contract due to nonpayment after providing the customer with written notice at least 14 days before the termination date. The notice must include the reasons for termination, the termination date, and the name, address and phone number of a supplier representative who can address questions about the proposed contract termination. The notice must also inform the customer that a default supplier will continue to provide the electricity or natural gas supply if the service contract is terminated.
• The supplier must also inform the distribution utility of the contract termination at least 14 days ahead of time. If the customer and the supplier make arrangements that result in continuance of the contract, the supplier must notify the distribution utility at least one day in advance of the scheduled contract termination date.
• A regulated distribution utility may not disconnect or deny distribution service to a customer due to the customer's failure to pay for a supplier's service or any service provided by another company. When the same utility provides distribution of both electricity and natural gas to a customer, it may not deny or disconnect natural gas service due to a customer's failure to pay for electric service, or deny or disconnect electric service due to a customer's failure to pay for natural gas service.

• Before disconnection residential service for nonpayment, electric and natural gas utilities are required to offer a deferred payment agreement.

Customer service

• A supplier's service contract provides a plain-language explanation of the supplier's rates, terms and conditions.
• A supplier must provide its service contract to a customer upon request.
• The service contract must include an information label providing basic information about the supplier's offer. All suppliers must use the same label format to make it easier for consumers to compare suppliers' offers. The information label includes:

1. The effective price for the supplier's service for various levels of monthly usage. The price will be shown in cents per kWh for electricity, or in price per dkt or mcf for natural gas.
2. Information whether the price is fixed or variable. If it's variable, the supplier must describe the potential range and possible causes of price variations and, if applicable, the pricing formula or index.
3. The length of time the contract will be in effect.
4. The supplier's toll-free phone number and hours that number is staffed.

• Customers may choose to do nothing and let the contract be renewed , or they may choose to change suppliers.
• A supplier may not change the terms and conditions of the contract upon the automatic renewal date unless the supplier has given written notice of the changes two months in advance of the effective date and the customer has returned written authorization of the changes to the supplier. Customer must also be informed of their right to switch suppliers rather than renew.
• The customer may terminate the service contract when relocating outside the supplier's service area.
• If a supplier plans to quit providing service, it must notify its affected customers, the PSC and distribution utilities in the state in writing at least two months in advance.

Deposits/fees

• The default supplier may require a deposit from a customer. The default supplier may disconnect service to a customer who has not paid for its default service or distribution service, after providing notice to the customer. Both deposits and terminations must be handled in accordance with the PSC's rules.

Right to cancel

• Customers have a three-day grace period after signing the contract during which they may rescind it without penalty.

Billing and collections

• The service contract must also prominently identify all charges, fees and penalties associated with the supplier's service and explain any conditions under which the supplier may terminate the supply agreement. The contract must include an explanation that distribution and transmission charges remain regulated, are not provided by the supplier, and identify whether the distribution utility or the supplier will bill for distribution and transmission.
• The supplier may contract with the customers' distribution utility to do its billing. In that case, they will receive one combined bill from the distribution utility that includes the supplier's charges and the distribution utility's charges. Alternatively, a supplier may choose to send its own bill to customers. That bill could either contain the charges for supply service alone and arrive separately from the distribution utility's bill or, depending on billing agreements, include the distribution utility's distribution and transmission charges as well.
• Each service component (supply, transmission or transportation and distribution, transition charges and universal system benefits charges) must be itemized. Charges must be identified as regulated or unregulated. The bill must include the name and toll-free phone number of each company for which charges are billed. Bills combining charges for both electric and natural gas services must separate the electricity-related portion of the bill from the natural gas-related portion and separately subtotal each.

Supplier licensing

• All electricity suppliers must be licensed by the PSC before offering to sell to customers in Montana. The PSC must make sure that electricity supply is offered and is adequate in terms of quality, safety, and reliability. The commission may require proof of financial integrity and a demonstration of adequate reserve margins or the ability to obtain those reserves; and a licensee to post a bond should an electricity supplier fail to supply electricity or lack financial integrity.
• A cooperative utility is not required to apply for a license from the Commission to be an electricity supplier to customers served by that cooperative utility in its electric facilities service territory or to any customers served by another cooperative utility.

Slamming

• A supplier must obtain written authorization from the customer before making a supplier switch. The supplier must provide a written authorization form, accompanied by the supplier's service contract. The authorization form must clearly confirm:

1. the customer’s billing name and address and each account number;
2. the customer’s decision to change suppliers and directions for the new supplier to effect the supplier change;
3. the customer’s understanding that by authorizing a supplier change, s/he is authorizing access by that supplier to usage and account information; and
4. written proof that the customer has received the supplier's service contract and agrees to its terms and conditions.

• If a supplier has switched an account without the customer’s authorization and the supplier cannot produce written authorization for the switch, the customer is not liable for payment of any charges to the unauthorized supplier.

Telemarketing

• The FTC's Telemarketing Sales Rule and the Montana Telemarketing Fraud and Prevention Act help protect customers from abusive and deceptive telephone sales practices. These laws restrict calling times to the hours between 8 a.m. and 9 p.m., and put other limits on telemarketers, including:

1. Telemarketers must disclose that it's a sales call, the name of the seller, and what they're selling before they make their pitch. If they're pitching a prize promotion, they must tell the customer that no purchase or payment is necessary to enter or win.
2. It's illegal for telemarketers to lie about their goods or services; earnings potential, profitability, risk, or liquidity of an investment; or the nature of a prize in a prize-promotion scheme.
3. Telemarketers must disclose the total cost of the goods they're selling, any restrictions on getting or using them, and if a sale is final or non-refundable. In a prize promotion, they must disclose the odds of winning, that no purchase or payment is necessary to win, and any restrictions or conditions of receiving the prize.
4. It's illegal for a telemarketer to withdraw money from any checking account without the customer’s express written authorization. Telemarketers cannot lie in order to receive payment, no matter what method of payment the customer may use.
5. The customer does not have to pay for credit repair, recovery, or advance-fee loan or credit services until these services have been delivered.
6. It's illegal for a telemarketer to call anyone who has asked not to be called.

Fraud

• In response to a complaint from a customer or another supplier, the PSC may initiate a proceeding to investigate any claims made by a supplier in advertising, marketing, promoting and representing its services to customers. On determining that a supplier's claims are misleading, deceptive, false or fraudulent, the commission may apply appropriate penalties, including license revocation.

Dispute resolution

• Every supplier must be able to respond to customer inquiries and complaints. If the supplier is unable to resolve a dispute with a customer, the customer must be informed of his or her right to file an informal complaint with the PSC.

Discrimination/redlining

• Investor-owned utilities cannot discriminate in favor of their own affiliates or engage in self-dealing. They must also grant access to their systems on a non-discriminatory basis.

Disclosure

• A supplier must be able to document any marketing claims it makes that its electricity or natural gas product is environmentally beneficial or is produced primarily with renewable energy sources.

Advertising/marketing/trade practices

• The PSC may investigate suppliers' marketing claims and may penalize suppliers whose claims are determined to be misleading, false or fraudulent.
• Suppliers affiliated with previously regulated public utilities that offered supply, transmission and distribution all in one package may not associate themselves in their marketing efforts with the perceived virtues of the previously regulated public utility.

Privacy

• No supplier, regulated distribution utility, transmission service provider, energy service provider, metering service provider, billing service provider, or other company or individual involved in the sale or delivery of electricity or natural gas, may disclose individual customer information to others without prior written consent from the customer except as provided by commission rule or order.