NorthWestern Energy’s property tax payments are going up this year, not down. In fact, they are going up 10 percent.

NorthWestern’s property tax bills have made lots of headlines across Montana recently. We are the state’s largest property taxpayer, and our property taxes are one of our largest costs of doing business. As Montana’s largest provider of essential utility services, our prices are based on the cost of providing that service. Given that property taxes are a significant portion of our customers’ bills, it is extremely important that we manage our property tax costs for the benefit of our customers.

As NorthWestern continues to invest in its electric and natural gas infrastructure, our property taxes have increased. However, the level and rate of the increases of taxes proposed by the Montana Department of Revenue ("MDOR") place an increasing burden on our customer’s bills and limits our ability to invest in safe, reliable and affordable service.

There are some important facts worth noting concerning our recent discussions with the MDOR and our 2016 property tax bills:

1) Even before the 2016 tax increase, NorthWestern and our customers were paying 34 percent ($121.9 million) of all the centrally assessed property taxes in Montana. The second largest was BNSF Railway at 7 percent ($17 million);

2) NorthWestern wanted to ensure it was allocated its fair share of Montana property taxes. In fact, even with the MDOR settlement, we are paying $12 million more than in 2015;

3) Under the MDOR’s initial valuation, NorthWestern’s tax bill would have increased from $121.9 million paid in 2015 to $163.4 million for 2016, a 34 percent increase. While we have been able to work with MDOR to avoid protests for almost a decade, we were prepared to protest had we been unsuccessful in our recent negotiations. We agreed to a $134 million bill, about a 10 percent increase over 2015, and 35 percent over 2014;

4) Because of the impact on schools and local governments, NorthWestern did not want to protest this tax increase and began negotiating with the MDOR in June in the hope we could reach a settlement sooner; and,

5) Local taxing authorities will receive larger checks from NorthWestern than they did last year, and much larger than the year before.

NorthWestern, like schools and local governments, wants greater certainty in how these taxes are calculated and paid. We are interested in changes that provide more predictability, reach final outcomes sooner, and stabilize the overall tax burden for NorthWestern and ultimately our customers. NorthWestern and our customers are taxed at the highest rate in Montana, 12 percent. In contrast, the state’s rural electric cooperates and their members are taxed at 3 percent.

NorthWestern’s tax payments are important to schools, local governments and other tax-supported entities. They are also important to our customers, and to the Montana Public Service Commission, which has directed that we separately disclose the significant amount of property taxes included in customer bills beginning this January.

Looking ahead, we hope to work with the MDOR to resolve valuation issues before they create budget issues. We also hope that we can develop more stable, predictable and equitable methods of establishing property tax valuations, a change that would benefit us all.

Pat Corcoran

Vice President, Government & Regulatory Affairs

NorthWestern Energy