Public Utilities Commission reduces MN Power’s proposed rate increase

Minnesota Power
Minnesota Power(KBJR 6)
Published: Jan. 24, 2023 at 12:35 PM CST
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3:15 P.M. UPDATE - Minnesota Power is responding Tuesday afternoon after news that a state agency approved only half of the company’s proposed rate increase.

Minnesota Power filed a rate request in November 2021, seeking to increase its annual operating revenue by $108 million or approximately 18%.

Company spokespeople said they hoped that revenue would allow them to raise revenue to help pay for sustainable energy initiatives.

Since Minnesota Power is a regulated utility, they need to receive approval from the Minnesota Public Utilities Commission whenever changes in revenue or expenses require adjusting rates.

While the commission waited to make this final decision, in December 2021, the MPUC approved an interim rate increase of about 7%, which came out to be about $5 per month for an average customer. All other customers, including businesses, saw a 14 percent increase.

On Tuesday, MPUC leaders announced they decided to approve a final increase of approximately $58 million, or 9.5%, instead.

That means, starting summer 2023, Minnesota Power’s residential customers can expect to pay about 2% more on their bill compared to what they are currently paying.

“A key role of the Commission is to ensure the reasonableness of utility rates,” said MPUC Commissioner Joseph Sullivan. “After extensive testimony and deliberating for eight hours, the Commission reduced Minnesota Power’s increase request by half, while making sure the company has the resources and tools they need. This decision protects consumers’ wallets while providing reliable electrical service.”

Shortly after the MPUC’s decision Tuesday, Minnesota Power company spokespeople issued a statement.

“I’m proud of our Minnesota Power team and all our company has done to lead our state’s clean energy transformation while providing safe and reliable power and keeping residential customers’ monthly bills below the national average. Yesterday’s decision, however, does not give us the resources and tools we need to do all of this,” said Bethany Owen, ALLETE chair, president and CEO. “As utilities are asked to do more and even faster, we expect rate review requests to become more frequent going forward. We plan to file another rate request later this year that will reflect the revenue requirements that Minnesota Power needs in order to advance its state-leading EnergyForward strategy.”

Owen added Minnesota Power has also taken a number of steps to mitigate rate impacts for customers, including requesting a lower interim rate for residential customers and adding new programs, and bolstering existing ones that provide bill discounts for low-income customers.

Minnesota Power also is providing customers greater control over their daily energy decisions and monthly bills through new tools that empower customers to reduce how much energy they use; programs to choose their sources of energy; and rate options to customize what they pay for heating, cooling and vehicle charging.

According to Owen, “the company has managed to keep 2022 operations and maintenance expenses lower than its 2010 operations and maintenance expenses, while inflation alone has increased costs nearly 2% annually over the same period. Minnesota Power’s residential electric rates have not kept pace with general inflation over the past 10 years, and have decreased by 0.2% annually on an inflation adjusted basis.”

ST. PAUL, MN. (Northern News Now) - On Monday, the Minnesota Public Utilities Commission approved, yet reduced, Minnesota Power’s proposal to increase electric rates, according to a press release.

Minnesota Power originally proposed an increase in rates of $108.3 million, or 17.58%, hoping to raise revenue to help pay for sustainable energy initiatives.

However, the MPUC approved an increase of approximately $58 million, or 9.5%, instead.

While the commission waited to make this final decision, in December 2021, the MPUC approved an interim rate increase of about 7%, which came out to be about $5 per month for an average customer. All other customers, including businesses, saw a 14 percent increase.

In establishing the new rate, the Commission made several decisions, including:

  • Established a return on equity of 9.65% for Minnesota Power
  • Removed costs related to power plants that are being retired
  • Mitigated increases to monthly basic charges for customers

“A key role of the Commission is to ensure the reasonableness of utility rates,” said MPUC Commissioner Joseph Sullivan. “After extensive testimony and deliberating for eight hours, the Commission reduced Minnesota Power’s increase request by half, while making sure the company has the resources and tools they need. This decision protects consumers’ wallets while providing reliable electrical service.”

Once the financial impact of Monday’s decisions is calculated, if final rates are lower than the interim rates, MPUC customers would receive a refund of the difference, with interest.

Northern News Now reached out to Minnesota Power for a statement Tuesday. We are waiting to hear back on exactly how this will impact the utility and its customers.