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DULUTH — Minnesota Power’s rate hike may not be as high as originally requested.
The utility company, a subsidiary of Duluth-based Allete, said it now seeks a rate increase of 4.9% for residential and small business customers and of 4.4% for industrial and large commercial customers compared to 2023 rates after striking an agreement with the Minnesota Department of Commerce, Minnesota Attorney General’s Office and Large Power Intervenors, a coalition of its largest industrial customers like taconite mines and paper mills.
It’s lower than the company’s full 12% rate increase proposed in November, and it’s lower than the interim rate hike of 8.6%, which has been in place since Jan. 1 as the Minnesota Public Utilities Commission considers the final request.
If approved, the average residential customer would receive a $5 per month refund — the approximate difference between the interim and final rate hikes — retroactive to Jan. 1. The refund would appear as bill credits, Minnesota Power said.
“This agreement recognizes the importance of considering the needs of our customers and communities,” Bethany Owen, chair, president and CEO of Allete, said in a news release Friday. “Taken as a whole, it results in a lower rate increase for customers than we originally requested while also allowing Minnesota Power to make the investments and hire the workforce needed to ensure we can meet the state’s ambitious climate goals.”
The settlement would also set the company’s return on equity at 9.78%.
When it first requested last year, Minnesota Power said the increase would help it increase its cybersecurity and grid maintenance staff and oversee large projects as it pursues 100% carbon-free energy by 2040. The company reached nearly 60% renewable energy in 2022.
The settlement was announced Friday, three days before Allete, Minnesota Power’s parent company, announced it was selling to Canada Pension Plan Investment Board and Global Infrastructure Partners for $6.2 billion, or $67 per share, and going private.
In an interview with the News Tribune on Monday, Owen said the two announcements were not connected and that the Public Utilities Commission would consider them separately.
An administrative law judge will host a series of public hearings on the rate case from May 20-22. The Public Utilities Commission will consider the settlement later this year.
The company’s last rate increase, 9.5%, was approved in January 2023 and came in at almost half its full request of 17.58%.
