Dive Brief:
- The Minnesota Public Utilities Commission has approved a rate decrease for 11 large industrial customers that will be paid for in part by increasing residential power bills, the Duluth News Tribune reports.
- In 2015, lawmakers directed Minnesota Power to consider lower rates for companies facing global competition, designated as Energy-Intensive and Trade-Exposed (EITE). The companies will now pay 5% less, while residential consumer rates will rise 10%.
- The PUC previously rejected a proposal that would have raised residential rates by 15%.
Dive Insight:
You don't often hear the phrase "pig in a poke" bandied around the power regulation scene, but Duluth News Tribune reports that's how Commissioner John Tuma described the PUC's decision. He called the new rates a "subsidy" paid for by residential consumers, and said there was no guarantee it would boost production or employment at local plants.
The 5% rate cut for EITC companies, primarily taconite plants and paper mills, is designed to help them remain competitive. The Tribune reported at least two companies, Hibbing Tacomite and U.S. Steel, said the rate decrease would have impacts on their output and staffing.
In 2015, Minnesota lawmakers passed a measure to support large industry and lower power rates for companies that employ large numbers of workers. The legislature directed Minnesota Power to consider rate proposals lowering the power bills for some struggling industries, increasingly under pressure from abroad.
The utility's initial proposal was rejected because it required residential customers to make up virtually all of the lost industrial revenue — potentially raising their rates almost 15%. Minnesota Power went back to the drawing board and revised its proposal so that business customers that do not qualify as EITE will see an average monthly increase of approximately 1.8%, while residential customers on average would see increases of about $8 a month.
While the PUC plans to review the new rates annually, they are in place for at least four years. It may not be the last increase; the Tribune reports Minnesota Power plans to file a general rate case later this year.
