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NorthWestern Energy customers would see a $6.5 million rate increase under a proposed settlement between the utility and some opponents to its Billings plans.

The $6.5 million rate increase is down from the $34.8 million originally sought by the South Dakota-based utility. Several parties who objected to the original proposal have agreed to the new amount, including Walmart, the Montana Consumer Counsel, the Department of Environmental Quality and a Montana group of large energy customers, such as Exxon, REC Silicon and Stillwater mining.

Groups who aren't part of the settlement included the Northern Cheyenne Tribe, Vote Solar, the Montana Environmental Information Center and a Billings group that says some Montanans have been over-billed for streetlights by tens of thousands of dollars.

The settlement would have to be approved by the Montana Public Service Commission, which during a hearing Monday in Helena didn't know what to make of NorthWestern's steep price drop.

The utility has for months presented experts arguing that it needed to raise rates $34.8 million, or $76.44 per residential customer.

"I'm confused as to how we should, or myself, look at testimony as being expert testimony that is not a hill to die on," said Tony O'Donnell, commissioner from Billings.  

In February, the PSC agreed NorthWestern rates could increase $10 million while the remaining $24.8 million was being considered. The utility argued the interim increase was essential.

Brian Bird, NorthWestern's chief financial officer, told O'Donnell to trust the parties that agreed to the settlement.

"If those parties are going to attest to you that this increase is fair to our customers; they represent them too. I think that's very powerful," Bird said.

The settlement agreement preserves a 10% return on equity for NorthWestern's 30% ownership share of Colstrip Power Plant. 

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