Published October 7, 2020
In 2015, the Minnesota Legislature passed a law designed to allow certain energy-intensive, trade-exposed (EITE) industrial entities to lower their energy costs. The law permits Minnesota Power and Otter Tail Power – electric companies serving parts of northern, central, and western Minnesota – to propose rate discounts to EITE customers operating within their service territory. In theory, lowering energy rates to EITE customers enables those customers to increase their production by spending financial resources elsewhere. Increased production in turn should result in net benefits of (a) increased electricity sales by the utility, and (b) protection and retention of jobs and a sustained tax base in communities hosting EITE facilities.
In late 2016, the Minnesota Public Utilities Commission approved Minnesota Power’s four-year rate discount to mining operations and paper mills operating in Northern Minnesota. Beginning on February 1, 2017, eleven of Minnesota Power’s largest customers saw a 5 percent electricity rate decrease. The discount was set to expire on February 1, 2021.
At the time the Commission approved Minnesota Power’s EITE rate, we expected the EITE discount to result in about a 10 percent rate increase to Minnesota Power’s other customers. However, under the EITE law, if electricity sales to EITE customers increase under the discount, those increased revenues go to offset the cost of the discount. Around the time the EITE discount went into effect, a new large mining facility, the Keetac mine (which was one of the EITE customers), came back online as a result of new tariffs on foreign steel. Keetac started buying electricity again, and it was enough to fully offset the discount to all 11 EITE customers.
In 2019, Minnesota Power asked to maintain its existing EITE discount through February 1, 2021. At CUB’s request, the utility agreed not to charge its customers any costs for the EITE discount during that time.
This year, after withdrawing the rate case that would have set new electric rates for EITE customers and everyone else, Minnesota Power requested that the EITE discount be extended again, until the new rates are in place from its next rate case, expected to be filed by November 1, 2021. The utility again pledged not to charge any costs to its other customers.
Though generally wary of EITE rates and their ability to generate the net benefits described above, CUB supports Minnesota Power’s extension request. Our support is grounded in Minnesota Power’s commitment to not seek additional recovery of EITE-related costs from other customers. We believe that a rate case presents the best opportunity for CUB and other stakeholders to reexamine the costs and benefits of the EITE rate in the most effective, comprehensive, and transparent way possible. In that process, we will continue our advocacy on behalf of Minnesota’s consumers to help ensure energy is accessible and affordable to all.
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