Update to Our Rate Review: April 23, 2020
All of us are in a much different place than we were when our rate review was filed in November 2019. While we believe our original request was prudent and appropriate, Minnesota Power recognizes the financial challenges our customers are facing during the COVID-19 pandemic. That’s why we submitted a proposal to the Minnesota Public Utilities Commission on April 23, 2020, to resolve our current rate review and provide rate relief to customers.
We are proposing that the current interim increase of 5.8% be reduced to a final average increase of 4.1% across all customer classes. In addition to lowering future monthly rates, this proposal would provide a refund of interim rates collected from Jan. 1 to April 30, 2020, totaling about $12 million. The average residential customer would receive an estimated refund of $18 and the average small business would receive a refund of $67.
How are we able to propose this resolution to our rate review now? We will continue to seek approval for recovering the income from a large, expiring wholesale market contract, but will delay many of the other revenue requests in our original proposal. In addition, we will delay any future rate proposal until March 1, 2021.
Our operating costs, including maintenance of the electric grid, continue to increase and changes in rates to cover those costs will be necessary in the future. But we believe our proposal will provide another way to help customers who today are facing financial hardship because of COVID-19-related business closures or unemployment, while also allowing us to focus on delivering the safe and reliable power that is vital to our communities.
Written comments on our proposal are accepted on the MPUC website at mn.gov/puc.
Update: April 30, 2020
The Minnesota Public Utilities Commission on April 30 approved Minnesota Power’s proposal to reduce the interim rate customers are paying as part of the company’s November 2019 rate review. Effective May 1, the current MPUC-approved interim increase of 5.8 percent will be reduced to 4.1 percent.
Minnesota Power requested the lower rate on April 23 as part of its proposed broader resolution to settle its rate case, which was in response to the financial challenges the COVID-19 pandemic is causing for customers and communities.
The MPUC is accepting comments from the public on the proposed resolution through 4:30 p.m. May 11. A hearing is expected in early June. Comments may be made at mn.gov/puc; by email at email@example.com; or by mail to Consumer Affairs Office, Minnesota Public Utilities Commission, 121 7th Place East, Suite 350, St. Paul MN 55101.
Update: June 4, 2020
The Minnesota Public Utilities Commission on June 4 approved Minnesota Power’s proposal to resolve its November 2019 rate request and provide timely rate relief and refunds to customers in response to COVID-19.
The final rate increase is an average increase of 4.1% across all customer classes. Minnesota Power also will refund interim rates collected from Jan. 1 to April 30, 2020, totaling about $12 million. The average residential customer can expect to receive a refund of about $20, while business customers can expect to receive a refund of about $70. Refunds may vary depending on energy usage and customers can expect to see their refunds sometime later this summer pending a written order from the MPUC.
November 1, 2019
Like other businesses, we experience increasing costs to deliver our product, which is safe, reliable and increasingly renewable energy, to our customers. Unlike most other businesses, we need regulatory approval to increase rates, so we filed a rate review request on Nov. 1 with the independent Minnesota Public Utilities Commission (MPUC) to increase our annual operating revenue by $65.9 million and adjust rates for electric customers.
As a regulated utility, we file a rate review request when the revenue we receive from providing safe and reliable electricity does not match the expense of producing that energy, including a reasonable return for investors.
Rates are set through a transparent process with the MPUC that regulates investor-owned electric utilities in Minnesota. The proceedings include opportunities for public input and participation during the process.
We are required to provide a detailed forecast of how we would structure our operations and make investments. The MPUC then reviews the information, with public input from customers, business groups, agencies, and other stakeholder organizations before making a decision.
The MPUC’s open and transparent process will include at least one local public hearing where customers can speak to an administrative law judge overseeing the rate review process. Written comments are accepted on the MPUC website at mn.gov/puc. We also encourage customers to give feedback directly to us by emailing AskUs@mnpower.com.
We know that for our customers there’s no right time for a rate increase. But we think we’re on the right track in building a safe, reliable and cleaner energy future — and this rate review will support those efforts.
We’re committed to delivering a safe, reliable and clean energy future while keeping rates affordable for our customers
Under our EnergyForward strategy, we have invested extensively to transform the way we produce and deliver your power. We’ve strengthened the safety and reliability of the power grid, added renewable energy resources, significantly reduced emissions at our remaining traditional power plants, and added new tools for you to manage your energy use and lower your bill.
- We’re on track to deliver 50 percent of your power from renewable sources in 2021, a little more than one year away, moving faster and further on renewables than any other Minnesota utility.
- By 2021 we will also cut our carbon dioxide emissions by 50 percent over 2005 levels.
- We will add more than 500 megawatts of wind power and hydropower to our energy mix by 2021 to reach 50 percent renewable and a 50 percent carbon reduction.
- We have closed or refueled seven of nine coal units.
- Our conservation program has exceeded state energy conservation goals for nine straight years.
- We’re Minnesota’s largest hydropower producer and were ranked the No. 2 investor in renewable energy, relative to size, among U.S. and Canadian utilities.
- Our proposed Nemadji Trail Energy Center natural gas power plant would be an important backup energy source when renewables can't meet regional needs, and also will enable the addition of more renewable energy sources.
- EnergyForward is working for you, keeping your energy safe and reliable while reducing carbon emissions.
- We’ve done all of this while keeping our average residential rate the lowest in Minnesota.
2019 Rate Review Filing
Volume 1 - Notice of Change in Rates – Interim Petition
- Interim Jurisdictional Financial Summary Schedules
- Proposed Interim Rates Schedules
- Comparison of Proposed Interim Rates to Most Recent General Rate Case
- Comparison of Proposed Interim Rates to Most Recent Fiscal Year
- Comparison of Proposed Test Year to Most Recent General Rate Case
- Comparison of Proposed Interim Rates to Proposed Test Year
Volume 2 - Direct Testimony and Supporting Schedules
Frank L. Frederickson
Frank L. Frederickson
Large Power Customer Outlook
Patrick L. Cutshall
Capital Structure, Cost of Capital, Retirement Plan Accounting, and Tax
Ann E. Bulkley
Return on Equity
Joshua G. Rostollan
Budgeting, Cost Allocations, and Expenses
Benjamin S. Levine
Julie I. Pierce
Power Supply Strategy and Wholesale Margins
Joshua J. Skelton
Daniel W. Gunderson
Transmission and Distribution
Laura E. Krollman
Employee Compensation and Benefits
Stewart J. Shimmin
Jurisdictional Costs, Class-Cost-of-Service Study, and Cost Recovery Riders
Marcia A. Podratz
Revenue Requirements and Rate Design