Serving Northern St. Louis County, Minnesota

Minnesota Power to seek rate hike

Marshall Helmberger
Posted 11/7/16

REGIONAL— Minnesota Power is asking the state’s Public Utilities Commission to approve rate increases that could eventually add $15 a month to the average residential power bill and $28 a month …

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Minnesota Power to seek rate hike

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REGIONAL— Minnesota Power is asking the state’s Public Utilities Commission to approve rate increases that could eventually add $15 a month to the average residential power bill and $28 a month for small business customers.

The increase will not apply to MP’s municipal purchasers of electric power, such as the Ely Utilities Commission. Homeowners and businesses in Tower, Soudan, Babbitt, Winton, and portions of Lake Vermilion would be affected by the proposed rate increases.

As a regulated utility, MP’s proposal is subject to review and approval by the MPUC, and the proposal is likely to face opposition from consumer and small business groups. It is already facing opposition from the Minnesota Iron Mining Association, which represents northeastern Minnesota’s taconite industry. Taconite plants represent the largest power customers served by MP, by a wide margin.

“Taconite mines are already doing everything they can to cut costs in these difficult times,” said Kelsey Johnson, President of the Iron Mining Association. “Each facility has undertaken monumental efforts to be as efficient as possible, and this rate proposal will only further increase one of the largest cost inputs for the taconite operations.”

In total, the proposed rate increase would generate an $55 million a year in revenues to MP, which the company says it needs to cover the cost of a number of recent investments it has made in its infrastructure, efficiency upgrades, and renewable forms of energy.

“Since 2011, Minnesota Power has invested extensively in our ambitious EnergyForward plan, changing how we provide safe and reliable energy to our customers in ways that include producing cleaner power, strengthening the electric grid that delivers energy, and adding technology that will help improve customer control over energy use,” said David McMillan, executive vice president Minnesota Power. “The rate review process will evaluate recent investments we have made on our system that enable us to continue transforming energy supply and delivery to benefit customers.”

The majority of the rate request ($37 million) is related to the EnergyForward investments. Other components of the rate request address lower sales revenue and pension investment costs.

The MPUC last reviewed Minnesota Power’s general rate structure in 2009.

The rate increases, if approved, would be implemented in phases. MP is seeking approval of an interim rate increase of eight percent for all customers. If approved, a typical residential customer’s monthly bill would increase by $6 when interim rates take effect Jan. 1, 2017. A small business customer’s monthly bill would increase by $22.

A second rate increase, potentially more significant for homeowners, would take place in early 2018, depending on the MPUC’s review of the MP’s proposal to shift more of maintaining the company’s system onto residential and small commercial customers. That second potential rate hike is part of MP’s proposal to lower power rates for certain very large industrial users, like taconite plants and wood products plants, that are significantly affected by foreign trade. That proposal is revenue neutral for MP, but the rate restructuring, if approved, will impact other MP customers.

To help customers manage and reduce their monthly bills, Minnesota Power offers conservation programs that provide helpful tools to lower energy use and obtain rebates for energy efficiency. For customers who find it difficult to pay bills each month, Minnesota Power partners with community programs that provide energy assistance. Minnesota Power has established a special website—www.mnpower.com/2016RateReview—where customers can get more information and they can submit questions about the rate request to AskUs@mnpower.com.

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