NorthWestern customers to see bump in monthly refunds from overpriced pollution clean-up

More than 48,000 NorthWestern Energy customers in South Dakota will see higher refunds in their utility bills over the next year.

The Public Utilities Commission approved a plan by the company on Friday that will bump up the refunds it has used to pay back customers since 2016 for a cleanup project that came in under budget.

The change will amount to an extra $.62 per bill for a total refund of $2.98 per month for the average customer, NorthWestern Energy Regulatory Specialist Jeff J. Decker said in a statement to the Commission.

The origin of the relatively meager monthly payback is decades old, tied to land owned by NorthWestern Energy that was once a town gas site for Aberdeen.
The site used a natural gas alternative derived from coal. That process would create a byproduct called coal tar, which would be poured into large holes in the ground. The railroad industry would use the pools of coal tar to treat railroad ties – creating a creosote layer of protection. 

Most town gas sites around the U.S. closed in the mid-1900s. But those pools of coal tar – often now covered – continued to seep into the soils, and eventually into public waters. 

Reported coal tar pollution of public waters tied to the NorthWestern Energy property in Aberdeen prompted the company to conduct a containment project that began in 2011.

NorthWestern built an underground barrier around the site to contain the coal tar seepage at an estimated cost of $5 million. To raise the funds, NorthWestern told the PUC at the time, it needed to raise rates on customers. The PUC granted the request for a rate hike. 

The actual cost was less than the estimate, however.

The company has been refunding customers now for six years, at an average, $2.37 a month. NorthWestern still has an over-recovered balance of $586,411. Friday’s approval of the refund hike by the PUC clears the way for refunds to rise to an average of $2.98 through most of 2023.