Otter Tail Power seeks approval for rate increase in North Dakota

transmission october 19 elp

Otter Tail Power filed a request with the North Dakota Public Service Commission to increase its non-fuel base rates by about $13.1 million, or 8.7 percent.

If the commission approves the overall request as filed, then a typical residential customer’s bill would increase by about $11.50 a month, and a typical business customer’s bill would increase by about $22 a month, the company said.

The filing starts a nearly year-long process, during which the commission first reviews the costs that the company incurs to provide customers with energy and related services, and then determines how much customers should pay for those services, the company said.

According to the Nov. 2 filing submitted to the commission, the proposed rate and tariff changes, including proposed revisions to the transmission cost recovery rider, renewable resource adjustment rider, and environmental cost recovery rider to reduce the rate of return and modify allocation factors, would result in an annual increase of non-fuel base electric revenues of about $13.1 million, or 8.72 percent.

Without adjusting the TCRR, RRAR, and ECRR to reduce the rate of return and modify allocation factors, the proposed rate and tariff changes would result in an annual increase of non-fuel base electric revenues of about $15.7 million, or 10.61 percent.

The company also said in the filing that the proposed rate and tariff changes would be effective for electric service on and after Dec. 2, or upon final approval if the rates are suspended. The test year for the proposed increase is the calendar year ending Dec. 31, 2018, with appropriate forecast test year adjustments, the company said.

In its statement, the company said that while the commission considers the overall request, the company has asked to increase rates on an interim basis by about $12.8 million, with the interim request to be billed uniformly to customers and apply only to base rates. Cost-recovery riders would continue at adjusted rates until the implementation of final rates, the company added, noting that if approved, the interim increase would be effective Jan. 1, 2018.

That interim increase would remain in effect until the commission makes a final determination on the company’s overall request, which Otter Tail Power expects would be in 2018. The company added that if final rates are lower than interim rates, then the company would refund customers the difference with interest. If final rates are higher than interim rates, then the company would not collect the difference.

The company also noted that part of its request was driven by its investments in required environmental technologies at its coal-fired Big Stone Plant and improved transmission infrastructure.

“The environmental technologies at Big Stone Plant will allow us to continue using this baseload resource well into the future,” Otter Tail Power President Tim Rogelstad said in the statement. “And our transmission projects are efficiently moving energy produced in this region and improving reliability of the energy grid.”

Otter Tail Power noted that according to Rogelstad, the company also is in the process of developing and implementing a new Customer Information System, which he said “will allow us to provide customers more for their energy dollar.”

The company said that it expects to launch the system next year.

Otter Tail Power Co. said that its current rates were established in 2009 based on 2007 costs.

“The costs we incur to provide customers with energy and related services – like most costs – have increased,” Rogelstad said. “It’s time for the NDPSC to review them again.”

In its filing, Otter Tail Power said that since it last sought a general rate increase – filed in November 2008 – the company has experienced increased operating expenses and costs driven by its investments in generation, transmission, and distribution infrastructure.

The proposed rate increase is needed so that the company has a reasonable opportunity to earn a fair and just return for its North Dakota electric operations, the company said. Otter Tail Power noted that the proposed rate increase also provides the company a solid foundation for the future, supporting the company’s efforts to make technology infrastructure investments. The return on equity (ROE) approved by the commission in the company’s most recent general electric rate filing was 10.75 percent. The company added that the direct testimony of its witness supports and ROE of 10.30 percent.

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