Otter Tail to raise rates as it invests in clean energy, new tech
The Minnesota Public Utilities Commission is reviewing a rate increase request by Otter Tail Power Co. and until a decision is made, allowing the provider to raise prices by a smaller degree. The request from Otter Tail comes as the provider invests in newer technologies.
BEMIDJI -- Otter Tail Power Co. customers will see their rates fluctuate over the next year as a request from the energy provider works its way through the Minnesota Public Utilities Commission.
In November, Otter Tail filed a general rate case with the PUC seeking permission to increase its electric rates by about 6.77%, or $14.5 million per year. As the PUC reviews the case, it granted an interim rate increase for Otter Tail of about 3.23%, or $6.9 million. Should the final rate be approved by the PUC, customers are anticipated to see an increase of about $7.75 on their monthly bills.
"The PUC recognizes that this is a long process, and that the company needs to recover costs for these large projects," said Stephanie Hoff, director of public relations at Otter Tail. "So, they allow us to begin recovering some of the costs to our overall request on an interim basis."
One of the larger projects Hoff described was the new Merricourt Wind Energy Center in North Dakota.
"It's the biggest project in our company's history," Hoff said. " We're investing in generation resources that are allowing us to meet our clean energy goals. So the investment in cleaner energy is part of our review."
Another project Hoff cited was a new customer information system to manage data more efficiently and securely. According to Hoff, the company serves more than 130,000 customers.
"The last time we asked the PUC to review our costs was in 2016, and a lot has changed since then," Hoff said. "It's time to say how the costs associated with providing this essential service has changed and how should we reflect that in our pricing."
The interim rates will be implemented on Jan. 1, 2021 and remain in effect while the case is underway. Should the final rate approved by the PUC be lower than the interim rate, Otter Tail customers will be provided a refund. Hoff said that if their requested rate is approved, the company will not go back and charge the customers for the difference.
According to a release from the PUC, the case has been referred to the Minnesota Office of Administrative Hearings where it will be overseen by an administrative law judge. The case will include public hearings for customers and the public to attend and provide comments, as well as written comments.
The release also notes that the company has cited deferring depreciation costs for its retiring 1950s era-coal fired Hoot Lake Plant as part of the rate review.
"We do have information about the rate review on our website, www.otpco.com/mnratereview, " Hoff said. "In January, we will have a video that explains the changes on your bill and shows what the implementation process is."