In June, Minnesota Power proposed increasing residential electric rates by 10% – an average of about $100 per year – in order to reduce rates large industries by 5%. CUB Minnesota is opposing the proposal, together with the Legal Services Advocacy Project, the Energy CENTS Coalition, and the Minnesota Citizens Federation Northeast.
In 2015, the Minnesota legislature passed a bill that allows two electric utilities – Minnesota Power and Otter Tail Power – to offer special rates for “energy-intensive, trade-exposed” (“EITE”) customers, to help the customers compete in the global market. Before the rates becomes effective, state regulators must agree that they will have a net benefit for the state or the utility.
Minnesota Power’s proposal would reduce electric rates for 11 taconite and paper companies, transferring these costs to residential and other ratepayers. That additional costs to households might be worthwhile if it would help expand production and keep jobs on the Range.
However, there’s no evidence that the increased costs would have an overall benefit. A 5% reduction in electric costs isn’t nearly enough to counter fierce international competition.
And some of the companies that would get this rate break are actually already at operating at full production. Giving them a rate break could help increase their margins, but couldn’t increase employment. Hibbing Taconite was at full employment in June, and United Taconite expected to be at full employment in August – with no change in electric rates.
On the other hand, a 10% increase in electric bills will absolutely impact the monthly budgets of many households. In Minnesota Power’s region, 17% of residents live at or below the poverty line and 18% are 65 years or older. About half of the area’s low-income households would not be exempt from the increased rates, and tens of thousands more who are near-poor would face hardships as well.
The proposal would also raise rates by 1.6% for small and mid-size businesses, many of whom are already struggling.
A five percent reduction in electricity costs won’t significantly affect hiring on the Iron Range. However, it will set a bad precedent. It would allow the big companies to unjustly benefit from a subsidy from families and small businesses.
The Minnesota Public Utilities Commission (PUC) is accepting comments on the proposal through September 2, 2016. Add your comments on PUC’s “Speak Up” comment tool: http://bit.ly/EITE2016.
You can read our full comments to the Public Utilities Commission at http://bit.ly/2bVxqxA.