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Minnesota Power interim rate hike approved

ST. PAUL — The Minnesota Public Utilities Commission on Thursday approved Minnesota Power's request to raise electric rates for its customers on an interim basis while the state regulatory agency considers a larger, long-term increase.

Electric rates will go up 5.6 percent for most Minnesota Power customers starting in January, down from the 8 percent interim increase the Duluth-based utility had initially asked for in November.

The average residential customer will see their bills go up $4 per month under the interim increase. Small business customers will see a hike of about $15.

Meanwhile, Minnesota Power has asked for a long-term 18 percent rate hike but will have to wait for the PUC to complete its 12- to 18-month contested case hearing process, which includes public hearings and a decision by an administrative law judge.

The utility says the rate increase is needed to pay for already made capital investments, and includes upgrades to transmission and distribution infrastructure, measures to protect against extreme weather events and for efforts to improve the efficiency and environmental compliance at existing power plants.

"We're pleased the MPUC agreed that an interim rate increase is appropriate, in light of the extensive investments we have made in our ambitious Energy Forward plan," said David McMillan, executive vice president of Minnesota Power. "Energy Forward investments are providing our customers with safe and reliable energy while continuing our transformation to cleaner sources."

The 18 percent general increase requested of the PUC is on top of another 10 percent proposed increase for homeowners as part of a rate shift Minnesota Power is seeking, under a push from the state Legislature, to lower rates for taconite plants and paper mills.

For Duluth customers, it would be a triple whammy, with the two rate increases added to an increase in the city's monthly franchise fee charged to Minnesota Power. That's going up from 1 to 3 percent in 2017.

The 18 percent hike sought in the November request would add another $15 to the average residential customer's monthly bill that currently sits at about $79.44. The 10 percent taconite plant shift would add another $8 each month. The city franchise fee would add another $2 or so.

Minnesota Power officials said Thursday that they may scale-back the long-term 18 percent hike some when they submit final paperwork to the PUC in February.

Several groups, including the Minnesota Citizens Federation Northeast and major industrial customers, are expected to oppose the proposed rate hikes. Ultimately Minnesota Power could be ordered to repay the interim increase if the PUC, after its review, finds it wasn't warranted.