Minnesota Power granted 11 percent rate increase

If a recent vote by the Minnesota Public Utilities Commission holds, Minnesota Power will get two-thirds of its requested rate increase.

The Duluth-based electric utility requested an $81 million increase almost a year ago. It lowered its request to $72 million in early summer because the taconite industry had rebounded, resulting in greater revenues from increased power sales.

Commissioners are expected to approve a rate increase of $54 million when their final order is issued within a few weeks. That’s an across-the-board 11 percent rate increase, the same as the interim rate increase in effect since Jan. 1.

But the final rate increases will differ among customer categories. A

4 percent increase for the average residential customer is expected, while rates are expected to increase 5 percent for small businesses and 16 percent for industrial customers, said Amy Rutledge, a Minnesota Power spokeswoman.

All increases, when they go into effect in early 2011, will replace the interim increases.

Although the resulting $2.50 increase per month for the average residential customer replaces a temporary $7 per month increase in effect this year, it’s unclear whether customers will get a refund.

“We don’t know if there will be a refund until the final order and how the increase will be allocated among customers,” Rutledge said.

Several hurdles remain before any increase can go into effect.

The commission could be asked to reconsider the matter by Minnesota Power, the Minnesota Attorney General’s Office, the Minnesota Department of Commerce’s Office of Energy Security or other interested parties.

State Attorney General Lori Swanson in December opposed any increase, citing the region’s high unemployment and economic troubles. The state Commerce Department’s Office of Energy Security recommended Minnesota Power get $28 million, or 35 percent of its original request.

Minnesota Power argued it needed the rate increase to pay for its investments in reducing emissions such as at the Boswell Energy Center in Cohasset. The company also needed the hike to pay for a transmission line that it acquired to bring wind-generated electricity from North Dakota as part of a state mandate to increase renewable energy sources.

“We think the commission, based on the outcome, recognized the capital investment we’ve made to our system,” Rutledge said. “We think the commission recognized that and the necessity of putting rates in place that reflect that investment.”

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