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N.D. regulators OK design of MDU rate increase in split vote

BISARCK -- The North Dakota Public Service Commission approved the design of a natural gas rate increase for Montana-Dakota Utilities on Wednesday in a 2-1 vote that had PSC Chairman Brian Kalk siding with the AARP in opposing how the increase was structured.

Commissioners had already approved a rate increase in December that allowed MDU to increase revenues by 4 percent, or $4.25 million. But how that would be collected from customers wasn't decided until Wednesday.

Under the approved rate design, MDU residential customers will pay $17.51 per month in customer charges. That's an average increase of $2.17 per month, though most customers won't see their bills increase because they've been paying an interim rate hike since Nov. 17.

However, customers may notice the difference in the breakdown of charges on their bills. MDU wanted to double the fixed charge to residential customers from about $9 to $18 and to do away with a separate distribution delivery charge. The AARP testified against such a large flat-rate increase, urging the PSC instead to land roughly in the middle at a fixed charge of $13.60.

Kalk said he agreed with that approach.

"The lower the fixed charge, if you do actually use less gas, you'll pay less," he said.

Commissioner Julie Fedorchak said customers would see the same total average increase either way, adding, "It's a difference in how it's collected." She said the benefits of a fixed daily charge include lower bills during the high-usage winter months and maintaining the incentive for customers to conserve, noting that more than 65 percent of a customer's bill is composed of the total cost of gas used each month.

"I think this is a reasonable approach," she said.

The commission ultimately approved a $15-per-month fixed charge, with the remainder of the customer charge coming in the form of a distribution delivery charge. Fedorchak and Randy Christmann voted in favor of the rate design, and Kalk voted against it.

Fedorchak said MDU customers who have natural gas service for a single use, such as a grill or to heat a shop, are most likely to notice the higher fixed charge.

MDU serves 99,000 natural gas customers in 76 communities in North Dakota, including Bismarck, Devils Lake, Dickinson, Jamestown, Minot, Valley City and Williston. About 87 percent of those are residential customers.

Wind farm proposal

In other business Wednesday, commissioners voted to set a public hearing on Sunflower Wind Project LLC's application to erect a 110-megawatt wind farm consisting of up to 59 wind turbines along Interstate 94 in Morton and Stark counties.

The public hearing is scheduled for 10 a.m. May 12 at the Hebron Community Center.

The wind towers would be spread out over about 12,000 acres of private land south of Hebron between Glen Ullin and Richardton, Kalk said. The project has an estimated cost of $180 million.

Fedorchak said the wind farm "would provide another generation resource to fuel the growing need for power out west."

Christmann noted that one difference between the proposed wind farm and the Bison Wind Energy Center turbines near New Salem is the latter are set back farther from Interstate 94. He said the Sunflower Wind project will be "much more visible to a large number of people who are driving, and so it'll be interesting to see whether that affects people's opinion."