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Minnesota Power seeks to lower rate hike, refund $12 million to customers

If approved by regulators, Minnesota Power's Jan. 1, 2020, rate increase will decrease from 5.8% to 4.1%, and the difference will be refunded to customers.

FILE: Minnesota Power and Allete building
The Minnesota Power / Allete building in downtown Duluth. file / News Tribune
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Minnesota Power is aiming to lower its proposed rate hike and refund the difference to customers amid the COVID-19 pandemic.

The Duluth-based energy company last year sought to increase residential rates by 15% and business rates by 10%. In December, the Minnesota Public Utilities Commission approved a temporary 5.8% increase across all customers that went in effect Jan. 1 as it weighed the company's full rate increase amount.

On Thursday, Minnesota Power proposed to regulators lowering that 5.8% increase to a 4.1% increase. If that is approved by regulators, it would then refund the difference from the last few months later this summer. The company said it will also not seek another rate hike until at least March 2021.

“Since Minnesota Power initially filed its rate request last fall, the COVID-19 virus has spread and is now impacting the health and financial well-being of people around the state and here in our communities," Bethany Owen, CEO of Allete, Minnesota Power's parent company, said in a news release Thursday morning. "We hope resolving our rate case will provide some much-needed relief for our customers in these difficult times.”

Minnesota Power said the 4.1% increase would only make up the revenue it expects to lose from a wholesale market contract expiring this month.

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Refunds will be about $18 to the average residential customer and $67 for a small business.

The move comes as several of Minnesota Power's largest industrial customers — Northeastern Minnesota's mining operations and paper mills — begin to idle as the COVID-19 pandemic hurts demand for steel and paper products.

Industrial customers make up about half of Minnesota Power's revenue.

When the original rate increase was first announced, Minnesota Power said it was needed in part to make up a loss in revenue due to lower demand from industrial customers, namely paper plants.

Asked if the drop in revenue coupled with a lower-than-expected rate increase would result in cost cutting or layoffs at Minnesota Power, spokesperson Amy Rutledge said: "We don't expect it to have a material impact on our workforce."

"Historically, we have weathered changes in load and we expect to do the same," Rutledge said, noting the idlings are expected to be temporary.

The company said it remains on schedule to produce 50% of its electricity with renewable resources by next year as the Great Northern Transmission Line, which will carry 250 megawatts of hydropower from Manitoba Hydro in Canada across much of northern Minnesota, and wind farm in Nobles County come online.

Minnesota Power has asked the PUC to consider the rate change and refunds within the next 45 days. The measure has the support of Energy CENTS Coalition, Citizens Utility Board and IBEW Local 31, Minnesota Power said.

Jimmy Lovrien covers energy, mining and the 8th Congressional District for the Duluth News Tribune. He can be reached at jlovrien@duluthnews.com or 218-723-5332.
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