State utility regulators on Thursday approved a 4.9% increase in electric bills for Minnesota Power residential customers, which will result in an extra $5 per month for a typical household.
The Duluth-based power company initially asked for a 12% rate increase, worth $89.1 million. But in May, Minnesota Power struck a deal to collect less money after negotiating with the Minnesota Department of Commerce, Attorney General Keith Ellison’s office and a coalition of large industrial customers including taconite mines and paper mills.
The Minnesota Public Utilities Commission voted 3-0 to approve that settlement, which will also raise rates by 4.4% for industrial and large commercial customers.
The average Minnesota Power residential customer will get a one-time refund of roughly $36 because of the deal approved Thursday. The PUC had approved a temporary 8.6% rate increase that began in January, which amounted to an extra $8 a month for the average residential customer compared to 2023 bills.
Katie Sieben, who chairs the commission, said it will be good for customers to get a refund. At the same time, she said temporary rates were “pretty high compared to what the final rate agreement is.”
Minnesota Power said the rate increase would help pay for several things, including recruiting and retaining its workforce during the transition from fossil fuels, along with spending on infrastructure for that work, extra money to address inflation and supply chain issues.
The deal negotiated by the company and approved by the PUC caps how much money Minnesota Power can collect from customers to pay salaries for its ten highest-paid executives at $1.5 million per year. Anything above that must come from shareholders. In Xcel Energy’s last electric rate case, the PUC also set a similar executive compensation limit, which Xcel has challenged in court.
Minnesota Power initially asked to increase rates for all of its customers at the same rate. But large industrial customers have long argued that they subsidize others when paying the same rate because they use less power distribution infrastructure. The final deal includes a lower rate for those huge customers.