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Minnesota Power Applies Again for Lower Industrial Electric Rates

July 7, 2016 By Cheryl Kaften

Minnesota Power filed a new rate plan on June 30 (Docket No. E015/M-16-564) with the Minnesota Public Utilities Commission (MPUC), designed to provide lower electric rates, the utility claims, “for up to a dozen northeastern Minnesota industrial companies that are uniquely exposed to global competitive pressures.”

This is the second time within a year that the utility has applied to the commission for financial relief for its large industrial customers. On February 11, the MPUC denied a request, filed by Minnesota Power (Docket No. E015/M-15-984) last November 17, “to ensure competitive electric rates for energy-intensive trade-exposed [EITE] customers.”

Approval of the request would have offer economic relief to some major Minnesota’s ratepayers – including companies in the steel, mining, and forestry sectors – that are dealing with major market downturns. Some companies would have seen as much as a 5 percent decrease in their rates.

However, those same costs would have been relegated to Minnesota Power’s residential customers, who would have paid about 14.5 percent more on their monthly electricity bills; as well as to the utility’s commercial ratepayers, who would have found themselves remitting from 1 percent to 4 percent extra.

The updated filing has been designed to address questions from the MPUC and to soften the rate impact on residential customers, Minnesota Power said.

The plan, for an Energy Intensive Trade Exposed (EITE) rate, has been proposed in response to a 2015 Jobs and Energy Bill authorizing select electric utilities to submit reduced rate plans for a limited number of their large industrial customers, such as taconite mines and paper mills that meet state criteria as businesses that are large electric energy users and subject to global competitive pressures. The purpose clause of the legislation stated: “It is the energy policy of the state of Minnesota to ensure competitive electric rates for energy-intensive trade-exposed customers.”

“Mining and paper companies face significant global competition and unpredictable swings in their business cycles that are going to continue well into the future,” explained Minnesota Power Executive Vice President Dave McMillan, adding, “More competitive electricity prices will play a significant role in encouraging their continued investment in northern Minnesota and help protect thousands of jobs. That’s an important part of Minnesota Power’s mission.”

The utility said its latest proposal “is revenue neutral for Minnesota Power and will result in a new monthly energy charge for most other customers.”

If approved by the MPUC, business customers that do not qualify as trade-exposed will see an average monthly increase of about 1.8 percent, based on their energy usage; while residential customers will see an average increase of 10 percent, or approximately $8 a month for a customer whose typical monthly bill is $79.44.

Changes to the plan to address MPUC concerns include capping the number of customers eligible for the EITE rate, basing the rate increase on energy usage for all business customers and expanding outreach efforts to low-income customers that qualify for energy assistance.

Under the statute, certain customers are exempt from the proposed rate, including low-income customers qualified to receive assistance through area heating assistance agencies; and energy-intensive trade-exposed industrial customers that are not eligible for the EITE rate

“Reducing electric energy costs is an important piece of a broader effort that will make these industries more competitive now and in the future,” McMillan said. “Along with other steps being taken by the companies, the state and federal government, and community leaders, we can help preserve jobs in northeastern Minnesota.”

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