REGIONAL- The Minnesota Public Utilities Commission last week approved a revised 4.9 percent rate increase for Minnesota Power residential and small business customers, well below the company’s initial request.
The average household will see an additional $5 per month on their electric bill, according to Minnesota Power. Industrial and large commercial customers will see a 4.4 percent increase. The approved rate hike is significantly lower than the 12 percent increase initially sought by the Duluth-based utility, a subsidiary of ALLETE, Inc.
Consumers had been paying an 8.6 percent interim hike approved last January while the company’s request was being considered. As part of the settlement, customers who paid the interim rate will receive a one-time refund in early 2025, estimated at $30-40 for most households, along with interest.
Minnesota Power’s revised rate proposal aims to support ALLETE’s EnergyForward strategy, which is focused on achieving 100-percent carbon-free energy by 2040. The company, which reached nearly 60 percent renewable energy in 2022, plans to use the additional funds to bolster its workforce, improve grid reliability, address inflation and supply chain issues, and enhance cybersecurity. The final rate hike is projected to raise approximately $34 million, less than half of the $89.1 million the company initially sought.
The settlement also caps executive compensation for the company’s top ten highest-paid leaders at $1.5 million, ensuring that expenses above this amount will not impact customer bills.
The agreement also set Minnesota Power’s return on equity at 9.78 percent, allowing it to attract the investment necessary to fund its clean-energy initiatives, which include transitioning to renewable sources and building resiliency in the electric grid.
The change was finalized after extensive negotiations between Minnesota Power, the Minnesota Department of Commerce, the Attorney General’s office, and a coalition of large industrial customers, including taconite mines and paper mills.
“This agreement strikes a balance, with beneficial outcomes for customers while keeping Minnesota Power on track as it works toward the state’s ambitious climate goals,” ALLETE Chair, President, and CEO Bethany Owen said in a statement. “We appreciate the hard work of our team and our stakeholders, and the commission’s recognition that this rate settlement agreement is the best outcome, with benefits for our customers, our communities, the climate, and our company.”
The PUC decision follows a 9.5-percent rate increase granted to Minnesota Power in early 2023, which was also lower than the initial request of 17.58 percent.