Public to weigh in on proposed electric rate hike in northern MN

Public hearings begin Monday in northern Minnesota on a contested electric rate increase proposed by Minnesota Power.

The Duluth-based utility wants to increase rates by about 6 percent overall to pay for recent capital investments. But that increase wouldn't be evenly spread out among all customers.

Residential customers would see a 15 percent hike under the proposal. That would raise the typical customer's bill by about $9, according to the utility.

"Certainly we recognize that there's never a good time for an increase," said Minnesota Power spokesperson Amy Rutledge, who added that this is the utility's first rate increase request since 2009. "But we believe we've delivered an essential service and high value to customers during these last seven years."

Rutledge said the increase is justified to pay for recent capital investments the utility has made to the electric grid, existing power plants, and new renewable energy facilities.

But the utility's proposal, first submitted to state regulators last year, has met with strong opposition from consumer advocates and some state officials.

Amy Levenson-Falk with the Citizens Utility Board of Minnesota said the rate request comes shortly after state regulators approved another recent increase to the rates Minnesota Power residential customers pay.

That increase, which hasn't taken effect yet, will increase the average customer's bill by 6 percent. It comes after the state legislature passed a law to help subsidize electric power costs for large industry in northeast Minnesota, primarily paper mills and taconite plants.

The new rate request would also disproportionately impact residential customers, consumer advocates argued. Their 15 percent proposed increase compares to 7 percent for businesses, and 4 percent for large industrial customers.

"Whether any overall increase is needed or not, there must not be a shift of cost from big industry on to residential ratepayers," said Buddy Robinson with Minnesota Citizens Federation Northeast. "Too many of Minnesota Power's customers are struggling financially."

Minnesota Power argues residential customers are paying less than it costs the utility to serve them.

Robinson said the Citizens Federation has refuted that claim for decades, "and the Public Utilities Commission has consistently denied most attempts to transfer costs from industry to residential customers."

Minnesota Power's initial request called for a larger rate increase. But the utility scaled it back when the mining industry rebounded on the Iron Range. Large power customers make up a much larger percentage of Minnesota Power's customer load than other utilities.

"We certainly believe that given our unique mix of customers, and also the investments we have made, that we do feel our rate request is reasonable and fair," said Rutledge.

Meanwhile the Minnesota Department of Commerce has recommended that the utility actually reduce its overall rates by about 3 percent, compared to Minnesota Power's request of an overall 6 percent increase.

The state Attorney General's office has called for no increase in rates.

The state Public Utilities Commission will ultimately weigh testimony from the utility, state officials, and members of the public before making a decision on the rate case, which isn't expected until sometime next year.

The public can comment on the proposal online through July 3, or by emailing consumer.puc@state.mn.us.