MINNESOTA POWER TRIES AGAIN FOR LOWER INDUSTRIAL ELECTRIC RATES
DULUTH — After being rebuffed by the Minnesota Public Utilities Commission in February in an attempt to shift electric costs from taconite plants to other customers, Minnesota Power is trying one more time.
The Duluth-based utility said Thursday it has submitted a revised plan to the PUC — a second effort to reduce rates for industries such as taconite and papermaking that gobble huge amounts of electricity and that have been hit hard by foreign competition.
A total of 11 large businesses would qualify for a roughly five percent cut in their electric rates — which could add up to millions of dollars for some of the bigger operations, like U.S. Steel’s Minntac taconite plant.
Other businesses served by the utility would see a 1.8 percent rate increase under the plan while residents would see an average 10 percent increase.
That amounts to about $8 per month more for most homeowners served by Minnesota Power, hiking the average monthly bill from $79.44 to $87.44.
The 10 percent rate hike proposed for homeowners is down from 14.5 percent proposed in the first effort nixed by the PUC.
The PUC has 90 days to take public comments and decide on the request.
“Mining and paper companies face significant global competition and unpredictable swings in their business cycles that are going to continue well into the future,” Dave McMillan, Minnesota Power executive vice president, said in a news release. “More competitive electricity prices will play a significant role in encouraging their continued investment in northern Minnesota and help protect thousands of jobs. That’s an important part of Minnesota Power’s mission.”
Electricity makes up about 30 percent of the cost of producing taconite iron ore pellets, industry supporters noted, and about 25 percent of papermaking costs.
In February the five-member PUC board of commissioners ruled that the Duluth-based utility hadn’t submitted enough evidence that the rate shift would meet the statutory standards of providing a “net benefit.”
The Minnesota Citizens Federation had argued that the shift would take $17.5 million annually out of homeowners’ pocketbooks, and out of the local economy, and that there’s no solid guarantee that multinational mining and paper companies will use the savings to restore jobs on the Iron Range.
The utility said Thursday that its new proposal should satisfy most of the issues raised by the PUC in its February denial “including the impact on residential customers.” The new proposal also includes additional outreach for low-income residents who would be exempt from the rate hike.
Wayne Brandt, executive vice president of the Minnesota Forest Industries trade group, said the new proposal will help secure wood-products industry jobs in a highly competitive global market.
“We support Minnesota Power’s filing which is intended to improve the competitiveness of paper and mining industries in northern Minnesota,” he said. “Prices for some of our products are the same as they were in 2008 when our country was in the midst of the recession. … Energy makes up about 25 percent of the cost of manufacturing a ton of paper – this is as much as the cost of wood and labor. We have seen electrical rates increase substantially and our competitive position versus other states and countries worsen over the past dozen years.”