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Published June 08, 2011, 03:55 PM

MDU Electric Rate Rise Boosts ND Customers' Bills

North Dakota regulators on Wednesday approved a rate increase for Montana-Dakota Utilities Co. electric customers that includes a $4.70 monthly boost in the minimum charge for providing power to a home.

By: Associated Press,

BISMARCK, N.D. (AP) — North Dakota regulators on Wednesday approved a rate increase for Montana-Dakota Utilities Co. electric customers that includes a $4.70 monthly boost in the minimum charge for providing power to a home.

The new rates are similar to what MDU's 75,000 electric customers in North Dakota have been paying for almost a year. They are roughly half as costly for consumers as the rates the Bismarck-based utility originally requested.

The state Public Service Commission split on whether to endorse the rate order, with Commissioner Kevin Cramer arguing that North Dakota customers should not pay for two MDU wind power projects in southeastern Montana.

Commissioners Tony Clark and Brian Kalk overruled Cramer, with Clark saying he believed Cramer's position was not "legally sustainable."

The decision on Wednesday closed a rate case that lasted 14 months and included a contentious, four-day hearing, during which the PSC's consumer advocates claimed that MDU delayed disclosing information that was needed to make rate decisions.

Cramer said Wednesday he believed the advocates' arguments had merit.

"I don't think the company should be the only party in a case that has a chance to be prepared for a hearing," Cramer said. "This is a two-way street. ... The PSC and its staff is not simply a rubber stamp for utilities."

Mark Hanson, an MDU spokesman, said there was "confusion back and forth" about the commission's information requests. The company will work with PSC staffers in the future to try to ensure the misunderstandings do not recur, he said.

"On our end, a lot of times, we felt like we were providing the information they wanted," Hanson said.

Montana-Dakota first applied for $15.4 million in increased electric rates in April 2010. The request would have given MDU a 14 percent rise in the utility's annual electric revenues from North Dakota customers.

In June 2010, the Public Service Commission approved a temporary $7.6 million rate rise for MDU while the commission studied the utility's rate filing. The PSC's final order on Wednesday grants $7.6 million in higher electric rates, a sum almost identical to the interim figure. It represents a 7 percent increase in the utility's annual electric revenues.

Most noticeable for homeowners is an increase in MDU's minimum charge for providing electricity to a residence.

The $5.50 monthly charge increased to $5.94 when the temporary rate rise was approved. When the permanent increase takes effect, the minimum charge will rise to $10.64. Hanson said the rate plan should be implemented within two months.

Clark said the minimum charge better reflected MDU's estimated $16 monthly cost for providing service to an individual customer. Keeping the charge lower meant some MDU customers were paying the expense of serving others, he said.

"That's a matter of trying to get rates more closely aligned with costs," Clark said. "This gets us a little bit closer to that, so you have less subsidy between consumer classes."

Under the new rate plan, a residential customer will pay a $10.64 minimum monthly charge and 7.6 cents per kilowatt-hour of electricity used. When the rate case was filed, customers were paying a $5.50 minimum and 7.8 cents per kwh.

An average residential MDU customer who uses 750 kwh per month will pay almost $2 more a month for electricity than they were paying under the original rate structure, the commission said.

During the commission's debate on the rate increase, Cramer pushed to have the PSC's final order exclude two Montana-Dakota wind power projects near Baker, Mont., in southeastern Montana. The Diamond Willow projects cost $65 million to build and are capable of generating about 30 megawatts of electricity.

Cramer argued that North Dakota ratepayers should not have to help pay for a project that was built to satisfy a Montana renewable energy mandate. Montana law says 15 percent of the state's electric power generation must be supplied by renewable sources by 2015.

Clark said he believed the commission could not justify excluding the Montana projects while allowing a costlier MDU wind energy project near Rhame, in southwestern North Dakota.

The Cedar Hills wind farm was built for $47.4 million and is capable of generating 19.5 megawatts, which makes it a more expensive power producer than the Montana wind farm, Clark said.

The Montana projects were built "at a cost that is within a zone of reasonableness for what consumers should be expected to pay," Clark said. "I think the courts are going to have a very difficult time looking at an order that says the commission is excluding projects ... that were less expensive than the one that was built in North Dakota."

Montana-Dakota Utilities Co. is a unit of MDU Resources Group Inc., based in Bismarck. The company's electric service territory covers much of central and western North Dakota, including Bismarck, Dickinson and Williston.

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