NorthWestern Energy Corp. has filed with Montana state regulators to adjust utility delivery rates for electric transmission/distribution and natural gas storage, transmission and distribution, the company said Tuesday. The utility seeks combined added revenues of $41.9 million.

NorthWestern, whose sale to a Babcock & Brown Infrastructure Ltd. (BBI) unit was recently aborted (see Daily GPI, July 26), is seeking increased rates to cover the cost of electricity and gas supply deliveries, along with a return on the utility plant and equipment throughout the state. Original book value of the utility infrastructure, with adjustments, is used to calculate what the rate coverage should be after deducting for depreciation and operating/maintenance expenses.

“We understand and appreciate that customers don’t want us to increase rates, and we try hard not to do so,” said NorthWestern CEO Mike Hanson, who said the utility in Montana had not sought a delivery rate increase since 2000 when it was still owned by the former Montana Power Co. “Rising costs are not unique to NorthWestern.”

NorthWestern estimated that the overall electric utility impact would be an added $4.55/month (6.61%), and residential natural gas service would increase $4.36/month (3.9%). The rate changes apply only to the delivery portions of bills.

Separately, the Sioux Falls, SD-based utility holding company had its current credit rating affirmed (BB+) and a “stable” outlook assigned from Standard & Poor’s Ratings Services (S&P). S&P said it based its assessment on NorthWestern’s debt totals ($730 million) last March 31.

“The removal from [S&P’s] CreditWatch and rating affirmation reflect the termination by B&B Infrastructure Ltd. of its formerly pending $2.2 billion acquisition of NorthWestern,” said S&P analyst Gerrit Jepsen. This followed the rejection of the deal by the Montana Public Service Commission.

S&P said the affirmation of NorthWestern’s credit rating also reflects improved financial measures. “Although financial measures have been improving, the company’s financial policy is aggressive as reflected by the significantly higher debt leverage that was proposed as part of the BBI transaction,” said S&P’s Jepsen.

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