Minnesota PUC approves significantly reduced annual Otter Tail Power rate increase of $100,000
Otter Tail Power Company’s rates are set to rise, now that it has won approval from the Minnesota Public Utilities Commission (MPUC), but the result should be approximately 4 cents more per month for the average residential customer.
MPUC approved a rate increase of $100,000, a fraction of the $14.5 million increase Otter Tail initially requested in November 2020. It also means customers could see significant refunds — with interest — from the interim rates currently being charged by the company, at $6.9 million. Those rates have been in effect since Jan. 1, 2021.
“The Commission approved a significantly reduced rate increase yesterday. Working with Otter Tail Power, the Commission found a way to protect consumers’ wallets and ensure there is reliable electrical service for Otter Tail Power’s customers,” Commission Chair Katie Sieben said.
A refund, once all calculations are concluded, would likely occur in the second quarter of 2022.
Nevertheless, in a statement on the decision, Otter Tail touted the decision as a positive one, still providing enough for it to recover costs associated with its Hoot Lake Plant, as well as the new 250 MW natural gas generating Astoria Station and 150 MW Merricourt Wind Energy Center. Hoot Lake retired earlier this year.
“Our employees continue our tradition of operational excellence and execute well on transformational projects,” Tim Rogelstad, Otter Tail president, said. “The Commission’s rate approval allows us to recover the costs of significant investments, which is great news for our investors. And that this is occurring without a material change to our rates is great news for our customers.”
Otter Tail’s last rate review for Minnesota was filed in 2016, which ended in a 9.41 percent return on equity. Its new return on equity has been set at 9.48 percent. The decision took into account factors such as lower depreciation expense thanks to extending the useful lives of wind generation resources, decreased pension costs for higher pension fund assets, and the likelihood of more wind farm tax credits.
The result is an adjustment with minimal change to customer rates.
