Dive Brief:

• Minnesota Power has filed an 18% rate hike request with the Minnesota Public Utilities Commission to cover, in part, capital costs associated with weather hardening and renewable resource integration.

• The request calls for an 8% interim rate hike effective Jan. 1, 2017, followed by an additional 10% hike, that would take effect in early 2018, after review and approval by the PUC.

• In conjunction with the rate request, the utility also filed its annual renewable resources rider plan with the PUC, which, if approved, Minnesota Power says would result in a 2017 reduction to residential and most business customers’ bills that would offset about half of the interim rate increase.

Dive Insight:

The Minnesota PUC in September approved a 5% rate decrease for 11 large industrial customers, but that was the second time around for the utility. In February, the PUC rejected a rate cut for Minnesota Power’s industrial customers, saying it would unduly burden residential customers. In the February filing, residential ratepayers could also have faced a 14.5% rate hike.

In the most recent rate filing, Minnesota Power is trying again to balance rates between residential and industrial customers.

The utility asks the PUC to review “the rate alignment for all customer classes to reflect the actual costs of serving those individual groups.” Minnesota Power says a cost-of-service study, required with the rate request, found that residential rates would need to increase by about 35% to cover the actual cost of producing and delivering electricity, a cost now borne by business customers.

Minnesota Power says $37 million of the $55 million requested in the rate hike is for its EnergyForward capital investment program, which included upgrades to transmission and distribution assets to protect against extreme weather events, to enable the integration of renewable resources, and to continue efficiency and environmental improvements to its existing power plants.

Minnesota Power is also proposing to provide savings to customers by extending to 2050 the capital cost recovery for its Boswell Energy Center. In December 2015, Minnesota Power completed a $240 million environmental upgrade at its 1,000 MW Boswell coal plant in Cohasset.

The utility says that since 2005, it has invested more than $600 million in its coal-fired plants to reduce emissions and improve efficiency.