Minnesota Power: Going green means a rate hike

Minnesota Power is seeking an almost 20 percent increase in rates for its residential customers to cover investments made in cleaner, greener energy.

For the average residential customer, that amounts to $13 per month.

"We know this is unwelcome news at an unwelcome time," said Pat Mullen, the company's vice president of marketing and public affairs. "These are improvements that need to be made. It is creating an environment that we all value."

News of the sought rate hike caused some shoppers at Miller Hill Mall on Monday to lament they've been hit by one increase and fee after another in a bad economy, from real estate taxes to new fees for street lighting and sewers.

"The average citizen in Duluth is not going to be able to afford an increase like that," said Sue Siverson of Duluth. "To me it's bad news. People can absorb a 2 or 3 percent increase, but 20 percent is substantial."

Said Roger Engseth of Duluth: "It's getting to be too much. That's the problem. Not just Minnesota Power, it's everything."

But Mullen says the $81 million net increase in electrical rates requested Monday is "critical" for the Duluth-based company serving Northeastern Minnesota. It's needed to pay for improvements that have already been made. More rate increases will be sought as more renewable energy projects come along, he said.

The request, filed Monday with the Minnesota Public Utilities Commission in St. Paul, comes as Minnesota Power customers are starting to see a 4.1 percent increase on their bills from a 2008 request, the first in 14 years.

For the average residential customers using 755 kilowatt-hours, that's a $2 a month increase. Lower fuel costs, however, have kept bills flat, according to Minnesota Power spokeswoman Amy Rutledge.

In that 2008 request, Minnesota Power was granted half the $40 million in increases it sought. In January, customers will get refunds from the higher interim rate the company was charging.

If this latest rate hike is approved, a 19 percent increase would go into effect in 2011. Because the process can take a year, the company is asking for a 17 percent interim increase - or $11 for the average residential customer - beginning in early 2010.

The average electric bill is about $68.

The rate hike will help pay for upgrades to Boswell Energy Center in Cohasset that reduced pollutants by 80 to 90 percent; acquiring a transmission line to bring wind-generated electricity from North Dakota to the region; and maintaining the company's vast system of 8,000 miles of power line.

"These investments are made with an eye to the future," Rutledge said.

The state is requiring utilities to generate 25 percent of their electricity from renewable sources by 2025. Minnesota Power's investments in renewable energy sources will help the utility meet that requirement. But it's more than that, Rutledge says, noting the importance of a cleaner environment.

"It's the right thing to do," she said.

The public will have opportunities to comment on the requested rate hike at public hearings yet to be set.