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South Dakota Public Utilities Commission Hearing
March 8, 2011, at 3:50 P.M. CST
State Capitol Building, Room 414
Pierre, South Dakota


 Chairman Steve Kolbeck called the hearing to order.  Present were: Vice Chair Gary Hanson; Commission Counsel: John Smith and Rolayne Wiest; Commission Advisor: Greg Rislov; Staff Attorneys: Kara Semmler, Karen Cremer and Ryan Soye; Staff Analysts: Dave Jacobson, Bob Knadle, Ross Pedersen, Brittany Mehlhaff, Chris Daugaard, Jon Thurber, and Bobbi Bourk; and Staff: Deb Gregg, Demaris Axthelm and Seanna Regynski.

Also present were: Brett Koenecke, May, Adam, Gerdes, and Thompson, representing NorthWestern Energy; and NorthWestern Energy representatives: Bleau LaFave and Jeff Decker.

Joining the meeting by telephone were: Commissioner Chris Nelson; and Pamela Bonrud, NorthWestern Energy.

NG11-001     In the Matter of the Application of NorthWestern Corporation dba NorthWestern Energy for its purchase of the Milbank NNG Pipeline 

A lengthy discussion took place regarding Docket NG11-001. An audio of the discussion can be found on the PUC Web site under Commission Actions; Commission Meeting Archives; 2011; March 8, 2011, Hearing for Docket NG11-001, recording located at: 

Commissioner Hanson moved to find that NorthWestern's proposed purchase of NNG's Milbank Line is not subject to approval pursuant to SDCL 49-34A-35 because the purchase is not a purchase of an operating unit or system in this state of another public utility because NNG is not a public utility as defined in SDCL 49-34A-1(12) and because the transaction is exempt from approval under 49-34A-35 because the purchase price is less than $10 Million.  Motion passed 3-0.

Chairman Kolbeck moved to find that NorthWestern's cost of acquisition of the Milbank Line will be prudently incurred pursuant to SDCL 49-34A-19(3) and will provide benefits to its customers pursuant to SDCL 49-34A-19(4) and to approve in principle the acquisition of the Milbank Line for inclusion in rate base on an acquisition cost basis to be determined at the time of the next general rate case.  Motion passed 3-0.

Commissioner Hanson moved to approve NorthWestern's establishment of a deferral or regulatory asset to account for and accrue a return on that portion of the costs of the Milbank Line which are not assigned to large customers under Natural Gas Firm Transport Agreement contract with deviation rates but to NorthWestern's overall system, but not to make a decision at this time on the amount and treatment of this deferral or regulatory asset in NorthWestern's next general rate case, but leave that for decision at the time of the next rate case.  Motion passed 3-0.

Chairman Kolbeck moved to grant NorthWestern's request to withdraw the proposed revisions to its Rate 87 tariff sheet Section No. 3, 1st Revised Sheet No. 6.9 and instead to approve, on a cost-based basis: (i) NorthWestern's proposed changes to its Contracts with Deviations in Section No. 4, 5th Revised Sheet No. 2, subject to the requirement that the Milbank Line rates and terms on such schedule, including for mileage adjusted Milbank Line Contract Demand, Firm Transport Only Credit, and charge for transport volumes in excess of contract demand, be available to additional similar large customers upon application to and approval by the Commission; and (ii) NorthWestern's contracts with deviations with MERC, Valley Queen Cheese, POET and Saputo Cheese.  Motion passed 3-0.

Commissioner Hanson moved to approve NorthWestern's assumption of the obligation to maintain and operate approximately 200 farm taps located along NNG's transmission pipeline in eastern South Dakota until December 31, 2017, and to approve NorthWestern's proposed tariff sheet Section No. 3, 2nd Revised Sheet No. 1.1 adopting MERC's existing rates to provide such service, but utilizing NorthWestern's own Purchased Gas Adjustment Clause rates and general terms and conditions.  Motion passed 3-0.

Chairman Kolbeck moved to grant MERC permission to withdraw its NNG farm tap tariffs on file with the Commission at such time as the transaction between NorthWestern and NNG is consummated and NorthWestern has assumed the farm tap obligations, and that MERC's tariffs shall remain in effect until such time.  Motion passed 3-0.

There being no further business, at the hour of 4:30 p.m. the South Dakota Public Utilities Commission Hearing adjourned.


/S/ Tina Douglas_______
Tina Douglas
Administrative Secretary
March 8, 2011