Otter Tail Power Co. recently filed a request to increase its rates with the Minnesota Public Utilities Commission (PUC). The filing starts an approximately 18-month process, often referred to as a rate case, during which the PUC reviews the costs the company incurs to provide customers with energy and related services, and then determines the appropriate prices for using those services.
"We're creating a cleaner energy future while keeping the prices our customers pay among the lowest in the nation," said Tim Rogelstad, president, Otter Tail Power Co. "Making this request now better prepares us for long-term success in providing safe, reliable, low-cost electricity to our customers."
Prudent investment in cleaner energy generation is primarily driving this request. The Merricourt Wind Energy Center, a 150-MW wind generation facility in southeast North Dakota, and Astoria Station, a 245-MW simple-cycle natural gas combustion turbine in east central South Dakota, are part of the company's plan to meet customers' future energy and capacity needs, replace expiring power purchase agreements, and prepare for the 2021 retirement of the 1950s-era coal-fired Hoot Lake Plant in Fergus Falls, Minnesota. The company currently anticipates the Merricourt Wind Energy Center will begin commercial operation by the end of 2020, and Astoria Station likely will begin commercial operation in the first quarter of 2021.
"Astoria Station complements our wind resources by providing a low-emission option when the wind isn't blowing," said Rogelstad. "Backing wind with natural gas captures the low-cost energy made possible by the current market for wind generation, while helping to ensure sufficient reliability from resources we can ramp up quickly during periods of high energy demand."
Continued focus on enhancing customer experience also is part of the request. A recently implemented Customer Information System allows customers more access and options related to their energy use and the company's services.
Otter Tail Power Co. requested permission to increase non-fuel rates by approximately US$14.5 million, or 6.77%. If the PUC approves the overall request as filed, a typical residential customer's bill would increase by approximately US$7.75 a month, and a typical business customer's bill would increase by approximately US$26 a month. The increase would be more for some customers and less for others depending on the rates on which they are served and the amount of energy they use.
While the PUC considers Otter Tail Power Co.'s overall request, the company asked to increase rates on an interim basis beginning Jan. 1, 2021. In January, customers will receive information with their electric service statements showing the requested overall rate increase and example interim monthly bill impacts for various customer types. The interim rates would remain in effect until early 2022. If final rates are 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 PUC will hold a public hearing related to the request and will post the hearing schedule on its website. Otter Tail Power Co. will also post the hearing schedule and provide additional details about its rate review request here.
