Commission denies Minnesota Power petition to defer accounting of lost revenues

Published April 5, 2021

Back in January, I wrote a blog about Minnesota Power’s efforts to take a procedural step towards recovering revenue losses incurred during the COVID-19 pandemic. In a nutshell, the Company sought the Public Utilities Commission’s (PUC) permission to calculate the amount of revenue it lost when two of its large industrial customers, the Verso paper mill and Keetac taconite mine, idled their facilities as a result of declining demand for their products during the pandemic. (The Keetac mine resumed operations in December, but the Verso mill remains indefinitely idled.) If the petition were approved, the Company would then have had the opportunity to try to recover those lost revenues from other customers.

CUB opposed the petition. We argued the petition would unreasonably and unfairly shift risk away from the Company and its shareholders onto already struggling customers who have no control over the pandemic, demand for steel or paper, or energy demands of large industrial facilities. We pointed out to the Commission that, despite the lost revenues the Company highlighted in its petition, the Company continued to pay uninterrupted quarterly dividends to its shareholders – and even raised quarterly dividend amounts going into 2021. These dividend payments continued even though the Company had repeatedly, over several years prior to the pandemic warned its investors and shareholders that an economic downturn affecting its large power customers could affect the Company’s revenues. Shareholders had numerous opportunities to assess that risk, and they chose to accept it. A utility’s rate-paying customers do not have a similar choice and are not guarantors of shareholders’ return on their investment.

On April 1, 2021, CUB testified before the Commission in a public hearing conducted on this matter. After the Commissioners heard arguments from the Company, CUB, and other testifiers, they voted unanimously to deny the Company’s petition.

We are very pleased with this result. Though we are conscientious of the unique challenges Minnesota Power and its large power customers have faced during these unusual times, seeking to recover lost revenue from customers who are also struggling would be an unfair, inequitable solution.