Minnesota agencies oppose Minnesota Power rate increaseMinnesota Power encountered resistance Wednesday from two state agencies challenging the rate increase it is seeking from the Minnesota Public Utilities Commission.
By: Peter Passi, Duluth News Tribune
Minnesota Power encountered resistance Wednesday from two state agencies challenging the rate increase it is seeking from the Minnesota Public Utilities Commission.
Seizing on its final opportunity to file a written opinion, the Minnesota Department of Commerce’s Office of Energy Security weighed in against granting the power company’s request for an $81 million per year rate increase. Instead, the office is recommending Minnesota Power be allowed to hike rates by just 35 percent of that amount — or $28 million.
Meanwhile, the Minnesota Attorney General’s office took an even more critical view of the rate case, recommending that the Duluth-based utility’s request be denied in its entirety.
Burl Haar, executive secretary of the PUC, said the recommendations definitely will be taken into consideration as the commission weighs the merits of Minnesota Power’s case, but they won’t bind its decision. The commission is expected to rule on the request by early November.
“They all have an opportunity to take a position and contribute to the development of a record of evidence,” said Haar, noting that the Public Utilities Commission acts very much like a court, weighing different considerations against one another.
Minnesota Power’s customers still have the opportunity to submit written comment or testify at approaching public hearings about the rate case.
“The real reason for this request is to ensure that Minnesota Power will be able to deliver clean, reliable power to its customers well into the future,” said Amy Rutledge, the company’s director of communications.
She said the rate increase is needed to cover the cost of millions of dollars in investments Minnesota Power already has made to reduce emissions from its existing operations, such as the Boswell facility in Cohasset, and to increase its mandated portfolio of renewable energy, including wind power operations on the Range and in North Dakota.
“These are investments that benefit everyone, and everyone shares in the cost,” Rutledge said.
But the Office of Energy Security contends Minnesota Power should be able to pay for necessary improvements to its system with a much smaller rate increase. Staff concluded Minnesota Power’s revenue is likely to exceed company estimates, making its financial needs more modest.
Attorney General Lori Swanson also questioned the timing of the rate case just one day after Minnesota Power’s last $20.4 million annual rate hike.
“We do not think Minnesota Power has made the case that it needs this increase at this time,” said Ben Wogsland, a spokesman for the AG’s office.
He accused the utility of “making projections largely based on guesswork.” Wogsland cited Minnesota Power’s poor track record of forecasting, pointing out that its actual revenue in 2007 was $49 million greater than the company’s projections.
Wogsland also singled out several questionable expenses Minnesota sought to cover through increased rates, including $200,000 per year in corporate lobbying expenses, $800,000 in executive bonuses, $622,000 for corporate aircraft expenses and even $3,900 that was spent to celebrate staff’s prior work on the rate cases.
Rutledge said the Public Utilities Commission is the ultimate authority on such matters, and she will leave it to that body to determine the appropriateness of specific elements within the request. She did note, however, that the work of lobbyists often benefits all ratepayers by helping to shape policy in a way that contains costs; the company jet is used for utility business and only that portion of use is built into the rate request; and an incentive plan in place rewards executives who achieve certain goals that benefit operations as a whole.