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Minnesota Power asks state for 19 percent increase for residential customers

The 19 percent increase is in addition to a hike proposed to cover rate cuts for industry.

Minnesota Power has proposed increasing rates on average residential consumers by 19 percent, a plan coming soon after a separate, previously proposed 10 percent hike on residents to help pay for a special rate cut to the utility’s struggling large industrial customers.

Duluth-based Minnesota Power, which serves more than 140,000 customers in northeastern and central Minnesota, filed a rate case Wednesday with the Minnesota Public Utilities Commission (PUC) that would increase its electricity rates by $55 million, or 9 percent overall. It’s the first general rate case the company has filed since 2009.

Minnesota Power’s residential customers, who currently have an average bill of $77 per month, would see a $6 increase if an interim rate hike takes effect Jan. 1, 2017. If the PUC approves Minnesota Power’s entire proposal, residential customers would face an additional $9 monthly increase later in 2017 or in early 2018.

Some low-income residential customers who get a discounted rate would see their monthly bills rise by 22.5 percent under Minnesota Power’s full proposal, from an average of $62 a month to an average $76 a month.

“We’re very concerned about this,” said Buddy Robinson, staff director of the Minnesota Citizens Federation Northeast, an advocacy group for consumers. “It would be a very large financial burden on tens of thousands of local residents with moderate to low incomes.”

Under the full rate proposal, Minnesota Power’s commercial, industrial and large power users would face increases of 7.6 percent to 11 percent.

The company said it needs the rate hike to cover investments in its electrical system, and that if the full increase is approved, its rates would still be comparable to other investor-owned utilities and electric co-ops in Minnesota.

The majority of Minnesota Power’s rate request — $37 million — would cover such capital expenses as upgrades to transmission lines and power distribution infrastructure; measures to protect against extreme weather; and the integration of renewable energy generation into its grid. The rate hike also would help make up for lower sales revenue and help cover pension costs, the company said.

Minnesota Power, the major business of publicly traded Allete Inc., is facing stagnating demand, as are most U.S. electric utilities.

With the new rate case, Minnesota Power is saying that its business and nonresidential customers have been effectively subsidizing residential rates. The company said in a press statement that a “cost-of-service” study, which is required to be filed with a rate case, concluded that residential customers’ rates need to rise 35 percent to cover the actual cost of producing and delivering power to them.

Read full article at Star Tribune