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Minnesota Power to Cut Industrial Rates, Raise Residential and Commercial Costs

September 19, 2016 By Cheryl Kaften

The Minnesota Public Utilities Commission (MPUC) on September 15 approved a proposal filed by Minnesota Power on June 30 (Docket No. E015/M-16-564) to provide lower electric rates, the utility claims, for “Minnesota industrial companies that are uniquely exposed to global competitive pressures.”

The commission voted 3-2 for the rate cut – which was ordered by the 2015 Minnesota Legislature to help reduce operating costs for Northeastern Minnesota’s largest industries, taconite plants and paper mills. Both recently have been hurt by competition from foreign imports.

The rate shift will give 11 of the utility’s largest customers a 5 percent rate reduction, according to a report by the local Duluth News Tribune.

The approved rate shift will collectively save the 11 big customers between $13 and $19 million annually, according to testimony during Thursday’s nearly daylong hearing.

Conversely, the PUC is expected to approve a rate recovery plan in coming weeks, the news outlet said, that would allow Minnesota Power to recover the money by raising homeowner rates about 10 percent and rates for small businesses between 1.8 and 5 percent, although those numbers aren’t set.

A 10 percent increase for residential customers would raise their monthly bills by about $8 per month – bumping up the average customer invoice from $79.44 to $87.44, or just under $100 per year.

Many low-income customers would be exempt from the increase.

The new rates will be in effect for at least four years, but the PUC said it reserved the right to annually review the situation to see if the shift had spurred both the benefit intended or caused undue burdens for homeowners.

Advocates of the proposal testified that the rate shift helps eliminate a de facto subsidy that the big electric customers have been paying to keep homeowners’ rates down. But Commissioner John Tuma argued that the rate shift was a subsidy of large companies by homeowners and small businesses.

“What you’re asking for is a subsidy,” Tuma scolded taconite industry officials at the commission meeting according to the report, later adding that the companies had provided no guarantee of added employment or production if they get the rate cut at homeowner’s expense. “We’re buying a pig in a poke.”

Bob Tammen of Soudan, a frequent critic of the mining industry – which is located in the unincorporated community in the form of the Soudan Underground Mine State Park and the University of Minnesota’s Soudan Underground Laboratory – said the rate shift produces no net benefit for Minnesota.

“I don’t believe there’s going to be a happy ending if we take resources from local homeowners and give them to global corporations,” he said.

The rate decision came just months before Minnesota Power plans to return to the MUC and ask for a general rate increase for all customers, the Duluth News Tribune reminded readers.

One comment on “Minnesota Power to Cut Industrial Rates, Raise Residential and Commercial Costs

  1. On the surface, it doesn’t seem illogical to give a break to industries if that translates in to corresponding benefits to residential rate payers who would subsidize the industries. The benefits should be monitored and if that doesn’t materialize, the subsidy should be clawed back.

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