20004-172-ET-25

Docket No. 20004-172-ET-25 concerns Montana-Dakota Utilities Co.'s (MDU) request to decrease the charge for its optional Renewable Energy Rider Rate 15 program for Wyoming electric customers. Under this program, customers can purchase "blocks" of renewable energy, each representing 100 kWh (or one-tenth of a Renewable Energy Credit, REC). The company applied to reduce the per-block charge from $0.22 to $0.01, effective June 1, 2025. This decrease is due to an over-recovery of costs in 2024, attributed to previously higher rates, a reduction in the price per REC, and fewer subscriptions. In 2024, 20 residential customers participated, purchasing 2,216 blocks (22,160 kWh). Total program revenue was $838, with costs of $285, resulting in a surplus. The rate change aims to address this surplus and stabilize future rates. MDU will continue customer notifications via bill inserts and website postings as required by the Wyoming Public Service Commission 1, 2, 1.

Key events and submissions in the Montana-Dakota Utilities Co. Renewable Energy Rider Rate 15 proceeding (Wyoming PSC Docket No. 20004-172-ET-25) are as follows:

- October 14, 2014: Wyoming PSC initially approved the Renewable Energy Rider pilot program, effective November 1, 2014. The program was later approved on a permanent basis in a subsequent docket 1.
- March 31, 2025: Montana-Dakota Utilities Co. filed an application with the Wyoming PSC to decrease the Renewable Energy Rider Rate 15 charge per block by $0.21, from $0.22 to $0.01 per block, citing over-recovery and reduced REC costs 2, 1, 2.
- May 5, 2025: The PSC issued a suspension order for the proposed rate change, commencing a six-month investigation period but allowing action at any time within that period 3.
- May 22, 2025: PSC staff issued a memorandum summarizing the application and background for the commissioners 1.
- May 29, 2025: The Commission approved the annual update to the Renewable Energy Rider Rate 15 at their agenda meeting 4.
- May 30, 2025: Montana-Dakota Utilities submitted the compliance tariff sheet reflecting the new $0.01 per block rate, effective June 1, 2025 4.
- June 1, 2025: The effective date for service rendered under the new Renewable Energy Rider Rate 15 rate 4, 4, 4.

The application, related notices, and supporting documentation remain available for public inspection and comment at the PSC office and online 2.

The main stakeholders in this docket (Docket No. 20004-172-ET-25) for the Montana-Dakota Utilities Co. (MDU) Renewable Energy Rider Rate 15 are:

- Montana-Dakota Utilities Co. (the Company): Proposed to decrease the charge per block from $0.22 to $0.01 per block, effective June 1, 2025, due to over-recovery of costs and a decrease in program costs and REC prices. The company supports this proposal and justifies the need for a positive but minimal charge to avoid potential customer abuse or "gaming the system" 1, 2, 2.

- Wyoming Public Service Commission Staff: Agree with MDU that there should be a positive charge, even if just $0.01, to prevent ratepayers from abusing the service (e.g., over-subscribing to blocks to receive credits that could offset their entire bill and then opting out, which could create under-recovery and higher future rates). Staff support the company's proposal for a $0.01 per block charge rather than a negative or zero rate 2, 2.

There are no documented stakeholders in the excerpts who are explicitly against the proposal to decrease the charge to $0.01 per block. The company’s application and the staff’s analysis both support the proposal, and no public comments or oppositions are referenced in the provided excerpts.

In summary:
- Montana-Dakota Utilities Co. (for the $0.01 per block rate)
- Commission Staff (for the $0.01 per block rate; against a zero or negative rate)

No stakeholders are identified as being against the proposal in the provided excerpts.

The main financial and timeline risks and concerns discussed in this docket for Montana-Dakota Utilities Co.'s Renewable Energy Rider Rate 15 program are:

Financial Risks and Concerns:
- Over-recovery of costs: The program had a net over-recovery of $437 (or $487 in some documents) at the end of 2024, primarily due to higher rates charged for the first five months of 2024, elimination of an under-recovered balance, and a decrease in program costs from a lower price per REC and fewer subscriptions 1, 1, 1, 2.
- Risk of customer "gaming": There is a concern that if the per-block charge is set at zero or negative, customers might "over-subscribe" to the program to offset their entire bill and then opt out, leading to potential under-recovery in the balancing account and volatility in future rates. Even with a $0.01 charge, there remains some risk of over-subscription and subsequent opt-out 2.
- Fluctuating REC prices and participation: The price per REC and the number of subscribed blocks can change from year to year, impacting program costs and the calculation of the per-block rate. This volatility could cause larger swings in rate updates if not managed carefully 1, 2.
- Need for a positive charge: Both the company and commission staff agree that maintaining at least a minimal positive per-block charge is necessary to deter abuse and ensure program stability 2.

Timeline Risks and Concerns:
- Timing mismatch in REC purchases: Due to timing differences, the purchase of RECs may not directly correspond to customer purchases within an individual 12-month period, potentially complicating cost recovery and balancing account calculations 1.
- Rate adjustment cycles: The current over-recovery may remain at the end of 2025 because the lower rate ($0.01 per block) still exceeds immediate costs. This could again require future adjustments to avoid sudden swings in the per-block charge in subsequent rate filings 1, 2.

In summary, the key risks are over-recovery or under-recovery of costs due to changing participation and REC prices, potential customer abuse if rates are set too low, and timing discrepancies between customer subscriptions and REC purchases 1, 2.

The docket for Montana-Dakota Utilities Co.’s Renewable Energy Rider Rate 15 identifies the following areas of growth:

1. Customer Participation Trends:
- There has been a notable fluctuation and recent decline in customer subscriptions and blocks purchased. The number of residential program participants was 20 in 2024, with 2,216 blocks purchased, which is a decrease from prior years (for instance, 2,709 blocks in 2023 and 3,398 in 2022) 1, 1, 1.
- Growth in customer participation is a key consideration for program sustainability. Lower participation levels reduce program revenues and may impact the economics of REC purchases and program administration.

2. Renewable Energy Credit (REC) Market and Pricing:
- The cost of RECs has decreased, contributing to an over-recovery of program funds and prompting a proposed reduction in the customer charge per block from $0.22 to $0.01 effective June 1, 2025 1, 2, 1.
- The volatility of REC prices is a key consideration, as future price increases could necessitate upward rate adjustments. The company aims to balance current over-recovery with potential future fluctuations in REC costs.

Key considerations related to these areas include:

- Ensuring the program remains attractive to existing and new customers to avoid further declines in participation.
- Managing and communicating rate changes transparently to avoid abrupt swings in customer charges due to REC price fluctuations or shifting subscription levels.
- Maintaining compliance with regulatory notice requirements and transparency in tariff updates 1.
- Monitoring the long-term viability of the program as a result of participation trends and REC market changes.

Overall, while customer participation and REC pricing are the primary areas of growth and change, the key considerations are program sustainability, rate stability, and regulatory compliance.