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Another electric rate hike?

May 26, 2017 /
Duluth Budgeteer

By Buddy Robinson

If you are a Minnesota Power customer, your electric bill could go up greatly in less than a year. How much? For most people, the increase in their bills could be as much as $150 to $200 a year or more. If electricity is included in your rent, your rent could go up.

It’s actually a combination of two rate hikes. Last month, the MInnesota Public Utilities Commission (PUC) gave Minnesota Power permission to raise your rates 6.7 percent. The purpose is to pay for a reduction in the bills of the big industry customers, the taconite mines and the paper mills.

If you don’t recall any public hearings on this, that’s because there weren’t any. This hike was done via a new, fast-track process approved by the state legislature in 2015. This 6.7 percent hike has not been added to your bills yet but likely will be tacked on sometime this year.

Meanwhile, the second, and bigger, rate hike is currently pending before the PUC. This one is going through the normal, lengthy process. The final decision won’t be made until the early part of next year. The total amount requested is over $33 million a year, which comes to a 6.1 percent overall increase.

However, residential customers as a group will get hit not with 6.1 percent, but with 15 percent. That’s a $15 million annual increase, which is almost half the entire hike. This isn’t fair since residential customers only use about 1/8 of all the electricity. And if you use about 300 kilowatt-hours a month, which is about half the average amount, your hike is even worse, 22.9 percent. The less you use, the higher your rate hike.

So, how much increase do you face in total? Let’s do the math. If you use the typical amount of 700 kilowatt-hours per month, you get 16.9 percent plus 6.7 percent, which equals 23.6 percent.  If you use only 300 per month — because that’s all you can afford, or because you’re trying to conserve electricity for the sake of the planet — you get 22.9 percent plus 6.7 percent, which equals 29.6 percent. In dollars, here’s how much that is: If you use 300 kilowatt hours/month, your overall electric bill will rise about $150 yearly. If you use 700 kilowatt hours, it’s a hike of about $310 yearly.

Both of these rate hikes have something in common. Minnesota Power’s justification for the 6.7 percent hike, as well as to hike residential rates 15 percent instead of the second 6.1 percent hike, is, in part, the notion that the taconite and mining companies have been paying more than they should have all along. They say that residential customers have always paid less than our fair share, and so some of big industry’s burden should be shifted onto us.

The Citizens Federation (previously known as the Senior Federation) has repeatedly challenged that notion, fairly successfully, over the past 37 years. But this theoretical “subsidy” argument keeps getting pitched by Minnesota Power and its big industrial customers, time and again.

You can find out much more information about the rate hike and what you can do about it at two public sessions that the Citizens Federation and allies will hold on Tuesday, June 6. They take place at 1 p.m. and 7 p.m., both at Holy Family Church, 2430 W. Third St. If you would like individual help figuring out own electric bill and how to hold down costs, there will be a bill clinic by the Minnesota Citizens Utility Board 3-6 p.m. at the same location.

At the June 6 meeting, you will learn about the official PUC public hearings, which take place at 2 p.m. and 6:30 p.m. on Tuesday, June 20 at the Inn on the Lake, 350 Lake Ave. S. You will also learn how to send your own comments to the PUC, whether or not you attend the public hearings.

Buddy Robinson is the staff director of the Minnesota Citizens Federation-Northeast.

Author: Annie Levenson-Falk

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