Montana Electricity Rates: What to Know

Montana has long enjoyed electricity rates well below the national average, thanks to abundant hydroelectric dams and wind resources. As of 2025, the average residential rate sits around 12.50 cents per kilowatt-hour — roughly 25% below the national average of about 17 cents. The average monthly bill of approximately $108 is among the lowest in the country. But those numbers are changing fast, and the reasons tell one of the most dramatic utility stories in America.

In May 2025, NorthWestern Energy — the state's dominant electric utility — self-implemented a 17% rate increase without waiting for Public Service Commission approval. The resulting backlash forced the company to back down, and the PSC eventually ordered refunds with interest. But by February 2026, the PSC approved a version of the increase: a 17% jump in residential base rates, translating to roughly a 12% overall increase in electric bills. At the same time, NorthWestern has been expanding its ownership stake in the aging Colstrip coal plant to 55% — even as every other owner exits — a move critics say could cost Montana ratepayers over a billion dollars more than the alternatives over the next three decades.

Montana's electricity story is defined by a catastrophic deregulation experiment in the late 1990s, a utility that keeps doubling down on coal, and rates that are still low but climbing faster than the national average. Understanding the forces at work is essential for managing costs that are no longer as cheap as they used to be.

How Montana's Electricity Market Works

Montana's market structure carries the scars of one of the most dramatic utility failures in American history.

The Deregulation Disaster

In 1997, Montana's legislature deregulated the production of electricity while keeping transmission and distribution regulated. Montana Power Company — the state's dominant utility — responded by selling its power plants to Pennsylvania Power and Light (PPL), its gas, oil, and coal assets to Canadian companies, and its transmission and distribution system to what would become NorthWestern Energy. Montana Power then pivoted entirely to fiber optics through a subsidiary called Touch America.

The company went bankrupt. And then the 2000-2001 Western energy crisis hit. With Montana's generation assets now owned by out-of-state companies free to sell power to the highest bidder, cheap Montana energy flowed to California where prices were skyrocketing. Industrial electricity rates in Montana spiked from roughly $10 per MWh to as high as $2,000 per MWh — a 200-fold increase. Residential customers were partially protected by rate caps, but the damage to the state's economy and public trust was enormous.

After years of fallout, Montana effectively re-regulated. NorthWestern Energy, which had purchased Montana Power's transmission and distribution system, began buying back dams and natural gas reserves that had been sold off. Today, Montana operates as a regulated market. Residential customers cannot choose their electricity provider. You are served by whichever utility holds the franchise for your area.

Regulatory Oversight

The Montana Public Service Commission (PSC) regulates rates and service quality for investor-owned utilities. Five commissioners are elected from geographic districts. The PSC does not regulate rural electric cooperatives, which are governed by their own member-elected boards.

Split Grid

Montana is unusual in being split between two major grid interconnections:

• Western two-thirds of the state: Part of the Western Interconnection (WECC), but not within an organized regional transmission organization
• Eastern Montana: Part of the Midcontinent Independent System Operator (MISO) and the Eastern Interconnection

This split creates complications for wholesale power trading and grid planning that most states do not face.

What Montanans Actually Pay

Current Rates

Montana's average residential rate of approximately 12.50 cents per kWh is about 25% below the national average. But rates vary by utility:

• NorthWestern Energy: The dominant utility serving the western two-thirds of the state. After the February 2026 rate increase, residential bills increased roughly 12% overall.
• Flathead Electric Cooperative: ~9.66 cents/kWh — among the lowest in the state. Has raised rates only three times since 2019, totaling 7.68%.
• Montana-Dakota Utilities (MDU): Serves parts of eastern Montana with separately set rates.
• Other rural cooperatives: Rates vary but are often competitive with or lower than NorthWestern.

Monthly Bills

The average Montana electric bill is approximately $108 per month, well below the national average of about $147. A typical NorthWestern Energy residential customer uses about 750 kWh per month. But following the February 2026 rate increase, those bills are climbing.

Rate Trends

Montana's rates have been rising faster than the national average:

Event	Impact
May 2025	NorthWestern self-implements 17% rate increase without PSC approval
July 2025	NorthWestern backs off after backlash; files for lower rates
Dec 2025	PSC approves $246M rate base for Yellowstone County gas plant (denies $43M of request)
Feb 2026	17% residential base rate increase takes effect (~12% overall bill increase)

The trajectory is clear: Montana electricity is still cheaper than average, but the gap is narrowing. If NorthWestern's Colstrip investments continue expanding and the pending merger with Black Hills Corp goes through, the rate trajectory becomes even more uncertain.

Major Utilities

NorthWestern Energy

NorthWestern Energy is Montana's largest electric utility, serving approximately 413,400 electric customers across the western two-thirds of the state — including Billings, Great Falls, Bozeman, Helena, and Missoula. The publicly traded company (NYSE: NWE) is headquartered in Butte and also serves customers in South Dakota and provides gas service in Nebraska.

NorthWestern was born from the wreckage of Montana Power's deregulation collapse, purchasing the transmission and distribution assets in 2002 and gradually rebuilding a regulated utility by buying back generation assets. Today it is one of the most controversial utilities in the Mountain West.

The Colstrip Gamble

The centerpiece of the controversy is NorthWestern's aggressive expansion into the Colstrip coal plant — one of the largest coal-fired power plants in the western United States, located in southeastern Montana. While every other owner has been exiting Colstrip, NorthWestern has been acquiring their shares:

• Previously: 30% ownership of Colstrip Units 3 and 4 (222 MW)
• As of January 1, 2026: 55% ownership after acquiring shares from Avista Corp and Puget Sound Energy at no direct cost for the ownership stakes — but the operating costs are enormous

The costs to ratepayers from this expanded ownership are significant:

• $18 million per year in new operations costs from the additional shares
• At 55% ownership, roughly $132 million per year in fuel costs passed to customers
• Total annual costs (fuel, operations, maintenance): upwards of $200 million (excluding future overhauls)
• $350-600 million estimated to install required pollution controls

The plant has serious reliability problems — it was operational only about 50% of the time during critical periods including the January 2024 cold snap and July 2024 heat wave. The Rocky Mountain Institute calculated that retiring Colstrip and replacing it with renewables could save Montana ratepayers up to $1.17 billion over 30 years.

NorthWestern has also faced scrutiny for attempting to shift its new Colstrip shares to a shell company, which the PSC described as an attempt to evade regulatory oversight. The PSC called on FERC to investigate in December 2025.

The Yellowstone County Generating Station

NorthWestern built a $310 million natural gas plant near Laurel, Montana — 18 reciprocating internal combustion engines with 175 MW capacity. The plant began generating electricity in March 2024. The PSC approved $246 million of the plant's costs into the rate base (denying $43 million of NorthWestern's request). The plant is expected to generate approximately 770,000 tons of CO2 annually. The Montana Supreme Court ruled that DEQ failed to adequately review greenhouse gas emissions, though the plant was allowed to continue operating.

Pending Merger With Black Hills Corp

In August 2025, NorthWestern announced an all-stock merger with Black Hills Corp valued at $15.4 billion. The combined company would serve roughly 2.1 million customers across eight contiguous states. Montana would represent 31% of the combined rate base — the largest share. NorthWestern's CEO Brian Bird would lead the merged company.

The merger requires PSC approval in Montana, South Dakota, and Nebraska, with an expected close in late 2026 or early 2027. NorthWestern says the merger will not change energy service or rates for Montana customers — though consumer advocates are watching closely. The company has announced plans to move its headquarters from Butte to Sioux Falls after the merger.

Montana-Dakota Utilities (MDU)

MDU, a division of Bismarck-based MDU Resources Group, serves parts of eastern Montana (as well as North Dakota, South Dakota, and Wyoming). The company serves approximately 145,700 electric customers across its multi-state territory. MDU's Montana-specific operations are smaller than NorthWestern's, with rates set through separate filings.

Rural Electric Cooperatives

Montana has 25 electric cooperatives collectively serving more than 400,000 Montanans — a significant share of the state's population. Major cooperatives include:

• Flathead Electric Cooperative: ~54,900 members in the Flathead Valley
• Yellowstone Valley Electric: ~18,228 members in central Montana
• Missoula Electric Cooperative: ~13,300 members across six western Montana counties
• Fergus Electric Cooperative: Serves 14 counties in central Montana

Cooperatives are member-governed and not regulated by the PSC. Their wholesale power typically comes from Central Montana Electric Power Cooperative, a member-owned wholesale cooperative. Cooperative rates vary but are often competitive with NorthWestern's and tend to be less volatile.

Why Montana's Rates Are Rising

1. Colstrip Coal Plant Costs

NorthWestern's expansion to 55% ownership of Colstrip is the single biggest driver of rate controversy in Montana. The plant costs ratepayers upwards of $200 million per year in fuel, operations, and maintenance — and those costs are rising as the plant ages. Future pollution control requirements could add $350-600 million more. Meanwhile, the plant runs at roughly 50% capacity during the periods when it is needed most. Every dollar spent keeping Colstrip running is a dollar not invested in cheaper alternatives.

2. The Yellowstone County Gas Plant

Adding $246 million to the rate base for the new natural gas plant near Laurel directly increased bills. While the plant provides needed capacity, it also exposes ratepayers to natural gas price volatility and locks in fossil fuel generation for decades.

3. Infrastructure and Capacity Costs

NorthWestern's grid serves vast rural territory that is expensive to maintain. Transmission and distribution upgrades, wildfire risk mitigation, and growing electricity demand all contribute to rising costs. The PSC has warned that "exorbitant rates" lie ahead if Montana fails to plan proactively for its energy needs.

4. Lack of Long-Term Planning

Critics — including the PSC itself — have faulted NorthWestern for reactive rather than proactive resource planning. Reliance on market purchases during peak demand is more expensive than securing long-term supply contracts. The utility's focus on acquiring existing fossil fuel assets rather than building new renewable generation has drawn particular criticism.

Understanding Your Montana Electricity Bill

NorthWestern Energy Bill Components

Component	Description
Service Charge	Fixed monthly fee ($4.20/month for residential)
Supply Charges	Cost of generating/purchasing electricity — the largest component
Transmission Delivery	High-voltage transmission from generation to local area
Distribution Delivery	Local poles, wires, and transformers to your home
USBC (Universal System Benefits Charge)	~$1/month — funds low-income assistance, weatherization, efficiency programs
Property Tax Surcharge	Pass-through of property taxes on utility facilities

Supply charges are the most expensive component and the one most affected by fuel costs and generation investments like Colstrip and the Yellowstone County gas plant. For a detailed walkthrough of each line item, see our guide on how to read your electric bill and spot overcharges.

Net Metering

Montana requires investor-owned utilities (NorthWestern, MDU) to offer net metering at the full retail rate for solar systems up to 50 kW. Credits can be banked and carried forward, but the bank resets to zero once per year and leftover credits are forfeited to the utility.

In a significant win for solar customers, the PSC unanimously rejected NorthWestern's proposal to end net metering, add a separate rate class for solar customers, and impose demand charges. Net metering will remain at the retail rate until rooftop solar reaches 5% of peak load.

Time-of-Use Rates

NorthWestern Energy does not widely offer time-of-use rates for residential customers. Montana lags behind states like California and Arizona in TOU adoption. For most Montana customers, reducing total consumption is the primary path to lower bills rather than shifting when you use electricity.

Solar and Renewable Energy in Montana

Generation Mix

Despite political headwinds, Montana generates a surprisingly large share of its electricity from renewable sources:

Source	Share (2024)
Coal	37%
Hydroelectric	32.7%
Wind	22.2%
Natural Gas	4.2%
Petroleum	1.5%
Solar	1.4%
Biomass/Other	1.1%

Montana ranks 10th nationally for share of electricity from renewables (~57%) and is the 6th-largest hydroelectric producer in the nation. Wind is the fastest-growing source, with nearly 1,900 MW of capacity in operation as of early 2025 and another 150 MW of wind plus battery storage planned by 2027.

The Renewable Standard — Repealed

Montana enacted a Renewable Portfolio Standard in 2005 requiring 15% renewable energy by 2015. The state met that target. Then the legislature repealed the RPS in 2021 — making Montana one of the few states to eliminate its clean energy mandate. Despite the repeal, renewables remain a large share of generation thanks to existing hydro and wind infrastructure.

Solar Incentives

Solar currently provides about 1.4% of Montana's electricity — small but growing. Available incentives include:

• Federal ITC: The 30% residential solar tax credit expired January 1, 2026, eliminated early by the One Big Beautiful Bill Act signed July 2025
• Montana property tax exemption: 10-year exemption on the value added to your home by a solar system (automatic, no application needed)
• Montana state income tax credit: $500 per individual, up to $1,000 per household
• Net metering: Full retail rate credit for systems up to 50 kW

Montana's relatively low electricity rates mean solar payback periods are longer than in high-rate states like Hawaii or Connecticut. But the state property tax exemption, income tax credit, and full retail net metering still make solar a reasonable long-term investment for homeowners with good southern exposure — especially as rates continue rising.

Community Solar — Vetoed

Montana does not have community solar. SB 188 (Montana Solar Shares Act) passed both chambers in April 2025 with overwhelming bipartisan support — 100 of 150 legislators voted yes, including a 46-4 margin in the Senate. The bill would have established shared solar facilities (50 kW to 5 MW) with on-bill credits to subscribers.

Governor Gianforte vetoed the bill in June 2025, citing concerns about the PSC allowing excessive credit rates. Despite having well over the two-thirds majority needed for an override, the veto stood. Community solar remains unavailable in Montana as of early 2026.

Wind Energy

Montana has excellent wind resources, particularly in the eastern part of the state. Nearly 1,900 MW of wind capacity is operational, and wind powers three of the state's ten largest generating plants. The largest installation is the Clearwater Wind Farm at 366 MW in eastern Montana, operational since late 2022. Puget Sound Energy's new Montana wind farm became fully operational in August 2025.

Strategies to Lower Your Montana Electricity Bill

1. Understand What Is Driving Your Bill

Pull up your most recent NorthWestern Energy bill and identify the supply charges — these are the largest component and the one most affected by the Colstrip and Yellowstone County gas plant investments. Knowing where the money goes is the first step toward reducing it.

2. Weatherize Your Home

Montana's cold winters make weatherization one of the highest-return investments available. Air sealing, insulation, and window upgrades reduce heating energy demand significantly. NorthWestern Energy's Free Weatherization Program (FWP) provides services for qualifying low-income households. Even if you do not qualify for the free program, basic air sealing pays back quickly at Montana's heating loads.

3. Install Solar With Montana Incentives

Montana's combination of full retail net metering (up to 50 kW), a 10-year property tax exemption, and a $1,000 household income tax credit makes solar a viable investment despite lower electricity rates. The loss of the federal 30% tax credit increases upfront costs, but the state incentives and full retail net metering partially compensate. Our guide on choosing the best solar panels for your home covers the key decisions.

4. Upgrade to a Heat Pump

If you heat with electric resistance or propane, a heat pump can cut heating energy use by 50-70%. Modern cold-climate heat pumps work well in Montana's winter temperatures. The combination of lower electricity costs and reduced fuel use makes heat pumps one of the strongest efficiency investments for Montana homeowners.

5. Replace Inefficient Appliances

At 12.50 cents per kWh, appliance efficiency matters less per-kWh than in high-rate states — but Montana's high heating loads and above-average household sizes mean total consumption adds up. Water heaters are the biggest target: a heat pump water heater cuts water heating energy by 60-70%.

6. Install a Smart Thermostat

A smart thermostat with proper setback scheduling cuts heating and cooling costs by 10-15%. In Montana's climate, where heating is the dominant energy expense, smart thermostat savings compound through the long winter months.

7. Monitor Your Usage

A home energy monitor identifies which circuits are driving your bill. Montana homes commonly have secondary heating equipment, workshop tools, or chest freezers in garages that consume more electricity than expected.

Low-Income Assistance Programs

LIHEAP

Montana's LIHEAP program is administered by the Department of Public Health and Human Services (DPHHS) and assists with heating bills, furnace repairs, and emergency energy assistance.

2025-2026 details:

Detail	Info
Heating season	October 1 - April 30
Heating benefit	$180 minimum - $3,228 maximum
Crisis assistance	Up to $9,999
Income limit (1 person)	$33,719
Income limit (4 people)	$64,846
Eligibility	60% of state median income

Households receiving SNAP are categorically eligible. Priority is given to households with young children and adults over 60. Apply at apply.mt.gov or through local eligibility offices. Processing time is approximately 45 days.

Energy Share of Montana

Energy Share is an independent nonprofit that helps Montanans facing energy emergencies. Unlike LIHEAP, Energy Share is not income-based — assistance is situational, available to anyone facing loss of heat or lights. The program provides one-time grants for heating bills, fuel purchases, and furnace repairs. Funded by utility companies, Universal System Benefits Charges, and consumer donations.

• Contact: 888-779-7589 or your local Human Resource Development Council (HRDC)
• Applications: Year-round; 1-2 week turnaround
• This is a last resort for those ineligible for other programs or still in need after other assistance

Weatherization Assistance Program

Free home energy improvements for qualifying low-income households, including comprehensive energy audits, insulation, air sealing, hot water conservation, and heating equipment repair. NorthWestern Energy's Free Weatherization Program (FWP) coordinates with the state program and has provided over $2.82 million in weatherization measures.

Universal System Benefits (USB) Program

Funded by a small surcharge on all utility customer bills (~$1 per month for a typical homeowner), the USB program supports four areas: low-income energy assistance, weatherization, energy efficiency, and renewable energy development. SB 150 increased the minimum annual funding allocation for low-income energy and weatherization from 17% to 50% of annual USB revenue.

Frequently Asked Questions

What is the average electricity rate in Montana?

As of 2025, Montana's average residential electricity rate is approximately 12.50 cents per kWh, about 25% below the national average of roughly 17 cents. The average monthly bill is about $108 — well below the national average of $147. However, rates are rising. NorthWestern Energy received PSC approval for a 17% residential base rate increase (roughly 12% overall bill increase) effective February 1, 2026.

Why are Montana electricity rates rising so fast?

Several factors are driving increases: NorthWestern Energy's expansion to 55% ownership of the aging Colstrip coal plant adds upwards of $200 million per year in costs passed to customers. The $310 million Yellowstone County gas plant was incorporated into the rate base. Infrastructure upgrades across NorthWestern's vast rural territory require ongoing investment. And capacity procurement costs are rising as Montana faces growing electricity demand without sufficient long-term planning.

Can I choose my electricity provider in Montana?

No. Montana briefly deregulated in 1997, but the experiment ended disastrously during the 2000-2001 Western energy crisis when industrial rates spiked up to 200 times their pre-deregulation levels. Montana effectively re-regulated, and today residential customers are served by their designated utility — typically NorthWestern Energy, Montana-Dakota Utilities, or a local rural electric cooperative.

What is the Colstrip controversy?

Colstrip is a large coal-fired power plant in southeastern Montana. While every other owner has been exiting, NorthWestern Energy expanded to 55% ownership as of January 2026. Critics argue the plant is unreliable (operational only about 50% of the time during critical weather events), expensive (upwards of $200 million per year in costs to ratepayers), and faces $350-600 million in future pollution control requirements. The Rocky Mountain Institute calculated that retiring Colstrip and replacing it with renewables could save Montanans up to $1.17 billion over 30 years. NorthWestern has also faced regulatory scrutiny for attempting to shift Colstrip shares to a shell company.

Is solar worth it in Montana?

For many homeowners, yes. Montana offers full retail net metering for systems up to 50 kW, a 10-year property tax exemption on the value added by solar, and a state income tax credit of up to $1,000 per household. The 30% federal tax credit expired January 1, 2026, which increases upfront costs. Montana's lower electricity rates mean payback periods are longer than in high-rate states, but the state incentives and rising rate trajectory make solar a reasonable long-term investment — especially given that the PSC unanimously rejected NorthWestern's attempt to end net metering.

What happened with Montana Power Company?

Montana Power was the state's dominant utility before deregulation in 1997. After deregulation, the company sold its power plants, fuel assets, and transmission system, then pivoted to fiber optics through a subsidiary called Touch America. The company went bankrupt. During the 2000-2001 Western energy crisis, deregulated electricity prices spiked catastrophically — up to $2,000 per MWh for industrial customers. NorthWestern Energy purchased the transmission and distribution assets in 2002 and has since been rebuilding the regulated utility system.

What assistance is available if I cannot pay my electric bill?

Montana offers several programs: LIHEAP provides heating assistance from October through April with benefits from $180 to $3,228 (crisis assistance up to $9,999) — apply at apply.mt.gov. Energy Share of Montana provides emergency grants regardless of income for anyone facing loss of heat or lights — call 888-779-7589. The Weatherization Assistance Program provides free home energy improvements for qualifying households. The Universal System Benefits program funds low-income assistance through a $1/month surcharge on all utility bills.

Your Montana Electricity Action Plan

This week:

1. Pull up your most recent bill and identify your supply charges, delivery charges, and total monthly kWh usage. If you are a NorthWestern Energy customer, note the impact of the February 2026 rate increase on your bill compared to previous months. Our guide on how to read your electric bill and spot overcharges explains each line.
2. Check your 12-month usage history. Note winter heating peaks — they tell you how much your heating system is costing.
3. Identify your biggest electricity users: heating equipment, water heater, older appliances, workshop tools.

This month:

4. If you heat with electric resistance or propane, research heat pump options. The savings are substantial in Montana's climate.
5. If your income qualifies, apply for LIHEAP through DPHHS at apply.mt.gov. Benefits range from $180 to $3,228 for heating assistance, with crisis assistance up to $9,999.
6. Seal air leaks around windows, doors, attic hatches, and plumbing penetrations. In Montana's cold climate, air sealing is one of the cheapest, highest-return projects.
7. If you are facing an immediate energy emergency regardless of income, contact Energy Share of Montana at 888-779-7589.

This year:

8. Get solar quotes from multiple installers. Montana's full retail net metering, 10-year property tax exemption, and $1,000 state tax credit make solar viable despite the loss of the federal credit — and the PSC's protection of net metering provides policy stability.
9. Upgrade your water heater to a heat pump water heater — typically the single highest-impact appliance upgrade.
10. Install a smart thermostat with winter setback programming.
11. Contact NorthWestern Energy about the Free Weatherization Program if you are income-eligible.

If you are struggling right now:

12. Call Energy Share of Montana at 888-779-7589 — assistance is available regardless of income.
13. Apply for LIHEAP at apply.mt.gov or your local eligibility office.
14. Contact your utility about payment plans. Do not wait for a disconnection notice.

For the long term:

15. Watch the NorthWestern/Black Hills Corp merger proceedings. The $15.4 billion deal would make Montana 31% of the combined rate base — the largest share. The PSC's conditions on the merger will directly affect your future rates.
16. Follow Colstrip developments. Every dollar NorthWestern invests in keeping the plant running flows to your bill. If pollution control requirements force additional spending ($350-600 million), the impact on rates will be significant.
17. Pay attention to PSC rate case proceedings. The PSC denied $43 million of NorthWestern's most recent request and ordered refunds for the unauthorized rate increase — active consumer engagement and PSC oversight are the primary checks on rate growth.
18. Budget for continued rate increases. Montana's rates are still below the national average, but the Colstrip investment, natural gas plant costs, and infrastructure needs all point to sustained upward pressure. Every efficiency improvement you make now compounds in value as rates rise.

Montana's electricity rates are at a crossroads. The state still benefits from cheap hydroelectric and wind power, and its rates remain well below the national average. But NorthWestern Energy's decision to expand into Colstrip — doubling down on aging coal while cheaper alternatives exist — threatens to erode that advantage over the coming decades. The deregulation disaster of the late 1990s taught Montana what happens when utilities prioritize corporate strategy over ratepayer interests. Whether the current chapter — a utility gambling on coal while the rest of the industry moves toward renewables — ends differently depends on the PSC, the pending merger, and what Montana ratepayers demand. In the meantime, every kWh you save through efficiency and every kWh you generate from solar is a kWh that does not flow through Colstrip.