Otter Tail Power this month said that it has filed a request with the South Dakota Public Utilities Commission to increase the company’s non-fuel rates by about $3.3m, or 10.1%, as the first step in a two-step request.
If the commission approves the overall request as filed, then a typical residential customer’s bill would increase by about $11 a month and a typical business customer’s bill would increase by about $24 a month, the company said.
While the commission considers the overall request, the company asked to increase rates on an interim basis beginning on May 21. Otter Tail Power added that the rates would remain in effect until the commission makes a final determination on the company’s overall request, which the company expects would be within 12 months. If final rates are lower than interim rates, then the company would refund customers the difference with interest. The company also said that if final rates are higher than interim rates, then the company would not collect the difference.
The second step in the request is an additional 1.7% increase in 2020 to recover costs for a wind generation facility that is scheduled to be in service by the end of 2019, the company said. If the commission approves that portion of the request as filed, then a typical residential customer’s bill would increase by about $1.75 a month and typical business customer’s bill would increase by about $4.50 a month.
According to the application submitted to the commission, the name of the wind generation facility is the Merricourt Wind Project.
The company also said in its application that the primary reasons for its need to increase rates are to recover additional rate base investments and associated depreciation expense; increases in operating costs incurred by the company in providing electric service to customers; as well as ongoing and planned investments in infrastructure and technology.
In its statement, Otter Tail Power said that infrastructure investments driving part of its request include required environmental technologies at its coal-fired Big Stone Plant in South Dakota and improved transmission infrastructure.
“The environmental technologies that we finished installing at Big Stone Plant in late 2015 allow us to continue using this low-cost baseload resource,” Otter Tail Power President Tim Rogelstad said in the statement. “And our transmission projects efficiently move energy produced in this region and improve grid reliability.”
Otter Tail Power said that a new Customer Information System, which is scheduled to go live later this year – and, according to Rogelstad, will allow customers more access and options related to their energy use and the company’s services – is also driving the company’s decision to review rates.
“Because of the Tax Cuts and Jobs Act we were able to offset some of the cost to provide service to South Dakota customers,” Rogelstad said. “We determined that reducing our overall rate increase request by more than $1 million is the most efficient and effective means of returning the cost-savings benefits to our customers.”
Otter Tail Power noted that the commission established the company’s current base rates in 2011 based on 2009 costs.