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Minnesota Power wins approval to cut industrial rates by 5%

Published September 16, 2016

Yesterday, the Minnesota Public Utilities Commission permitted Minnesota Power to offer 11 of its industrial customers a break of about 5% off their electric rates.

In a 3-2 decision, Commissioners agreed with the utility and the state Department of Commerce that the break would have a net benefit to the utility. The Commission delayed a decision of whether to allow the utility to increase rates 10% on residential customers in order to pay for the discount.

CUB strongly disagreed with the Commission’s decision. We believe that the benefits or costs to all electric ratepayers – captive customers of a monopoly utility – must be taken into account. The utility is proposing to shift up to $19 million per year of costs onto other ratepayers, which would place a real burden on many in northeast Minnesota. However, the Commission believed the legislature’s intent was to consider only whether such a rate shift would benefit the company and its shareholders, and so made its decision on that basis.

The Commission granted CUB’s request to require Minnesota Power to report on the effects of the industrial rate discount, including whether the discount helps mines and mills increase their production, and whether any residential rate increases that may be imposed make it harder for residents to keep up with their electric bills. The utility is required to work closely with CUB and other consumer advocates in reporting this information.

As we requested, the Commission retained the authority to cancel the rate discount if it proves to not have a benefit.

A Star Tribune article provides more details on the decision. Stay tuned in the coming months for more information on how the costs of this rate shift will be allocated.

Author: Annie Levenson-Falk

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