REGIONAL— The price of electricity could soon be on the rise for some North Country residents. On Monday, Minnesota Power filed a request with the state’s Public Utilities Commission that seeks an 18-percent increase in electric rates for its retail customers, including residential and businesses.
The company is proposing to raise rates to increase its operating revenue by $108 million annually.
According to a company statement, the higher rates are necessary to cover the cost of its transition to non-carbon-based forms of power production as well as to make up for the reduction in electrical demand in recent years, as many customers adopt energy-saving technologies.
Minnesota Power serves customers in Tower-Soudan and along portions of Lake Vermilion’s Pike Bay, in addition to much of the Mesabi Iron Range. The proposed rate increase, if approved by the MPUC, would not immediately impact the rates to municipally owned electric grids, such as Ely’s. Those rates are set through separate contracts negotiated between the parties.
“The energy industry of the 2020s looks far different than it did five years ago as our customer’s expectations for clean energy and high-value service are increasing,” said Bethany Owen, president and CEO of ALLETE, Minnesota Power’s parent company.
Minnesota Power, through its Energy Forward program, has made considerable progress in its transition away from carbon-based fuels for electrical production. Currently, just over half of the company’s electrical power comes from wind, solar and hydro ,and the company has committed to increase that to 70 percent by 2030. The company expects to phase out all coal-produced power by 2035 and to reach a 100- percent, carbon-free power supply by 2050.
That transition to alternative sources of power has increased the company’s operating costs, at least in the short run. “In terms of renewables, one of the greatest benefits is that when the renewable resource is available, like when the sun is shining or the wind is blowing, the cost of energy can be lower than traditional resources,” notes Minnesota Power spokesperson Amy Rutledge. “However, customers require energy 24/7 and we need to maintain and invest in an energy system that can reliably deliver energy to customers at all times,” she added.
At the same time, Minnesota Power says that its customers are buying less power than in the past, and that also affects the bottom line for a company that makes its money from the electricity it generates.
“Minnesota Power customers have exceeded the state energy conservation goals every year for the last decade, reducing energy consumption and total energy bills for households and businesses,” notes the company in a statement issued this week.
A lengthy process
As a regulated utility, Minnesota Power will need approval of the MPUC before it can implement its rate increase on a permanent basis, and that hasn’t always been an easy process for the company. Previous requests to raise rates were modified by the MPUC in recent years following considerable opposition from consumer groups and the state’s Department of Commerce. The rate increase process will include evaluation from state agencies along with public hearings.
The company has requested that the MPUC approve a 14 percent increase on an interim basis, beginning in January. The MPUC has the authority to approve the increase on an interim basis and the increase would remain in effect until a final decision is made. If the rate eventually adopted is lower, the company would refund any difference, with interest.
According to the company, a typical residential customer, with a monthly usage of 701 kilowatt-hours would see an increase on their power bill of about $15 a month. A small business customer with a monthly usage of 2,581 kilowatt-hours would see an increase of about $55 per month.
The company says it is working to help keep power affordable for low-income customers, through a discount program for those who qualify. “If the rate request is approved, usage-qualified low-income customers will continue to have some of the lowest average bills in the state due to special discounts included in the company’s rate design transition,” according to the company.