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Otter Tail Power Files for Higher Electric Rates

February 26, 2016 By Cheryl Kaften

Otter Tail Power (OTP) –  an investor-owned electric utility that provides service 61,100  residential, commercial, and industrial customers in Minnesota – filed a request (Docket No. E017/GR-15-1033) on February 16 with the Minnesota Public Utilities Commission (MPUC) for authority to increase retail electric rates in the amount of $19.3 million, or 9.8 percent, effective April 16.

The average monthly impact of the proposed rate increase for residential customers would be $9.53 per month, or $114.36 per year, according to the utility, which notes, “The impact on individual customers will be higher or lower depending on each individual customer’s actual electric consumption.” General service business customers would see a bill increase of about $22 per month, or $264 annually.

The company said that the proposed increase reflects its investments in new environmental technologies and grid reliability, paired with overall rising costs.

“While we’ve been diligent in managing expenses and selecting low-cost options to meet customer needs, the cost of providing service is more than we’re able to recover through our current rates, which went into effect in 2011 based on 2009 costs,” said OTP President Tim Rogelstad, adding, “With customers in mind, we’ve been innovative so that the price they pay for clean, reliable electricity will continue to be among the lowest in the region.

“For example,” Rogelstad said, “the new air-quality control system at [the coal-fired] Big Stone Plant cost about 30 percent less than other options — and the project came in at less than $380 million, more than $100 million under budget.”

In the event that the rate change is suspended by the MPUC, or the review period is extended due to the volume of cases that the commission is considering, the utility has asked for permission to increase rates on an interim basis. If approved, the interim increase would be effective April 16. It would remain in effect until the MPUC makes a final determination on the company’s overall request, which Otter Tail Power Company expects would be in 2017.

With MPUC approval, customers will receive printed information with their electric service statements starting April 16 – showing the approved interim rate increase, the requested overall rate increase, and example monthly bill impacts for various customer classes.

If the MPUC’s concluding decision results in final rates being lower than interim rates, the company will refund customers the difference with interest. If final rates are higher than interim rates, the company will not collect the difference. The increase will become effective approximately 60 days following the date of the MPUC order approving the new rates.

The MPUC will hold public meetings related to the request and will post the meeting schedule on its website once that schedule is determined. Otter Tail Power Company also will post the meeting schedule on its website.

“We carefully balance each decision we make with the cost impact it has on our friends and neighbors. Our employees work, live, and play in the area we serve,” said Rogelstad. “As employees and customers, we respect and appreciate our company’s commitment to reliable, economical service.”

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