Minnesota Power rethinks rate increase: wants to lower bills, offer refunds

Minnesota Power is reducing its rate-increase request in response to "economic uncertainty related to the COVID-19 crisis," the Duluth-based utility announced Thursday.

Instead of raising the average residential bill $11.66 a month as first proposed last fall, monthly charges will go up $3.53 compared to 2019 rates.

That will save residents about a dollar on current monthly bills as an interim rate increase went into effect at the beginning of the year.

If the Minnesota Public Utilities Commission approves the proposal — and the company has asked for a decision in 45 days — $12 million in refunds will be issued later this summer, averaging $18 for residential customers and $67 for small businesses.

"This is really an unprecedented plan we're putting forward, but one that makes sense in these unprecedented times," Minnesota Power spokeswoman Amy Rutledge said.

The new rate increase, a $35 million boost to 2019 levels, will cover lost revenue due to a sales contract with Basin Electric Power Cooperative expiring at the end of April.

Last fall Minnesota Power proposed a $66 million rate increase, which would have been a 10.6% average increase across all customers. The new proposal is a 4.1% average increase and has the backing of ratepayer-advocacy groups, Rutledge said.

"We really feel this was the right step to take at this moment in time to help customers who are facing some incredible challenges from COVID-19," she said.

Minnesota Power has 145,000 customers across northern and central Minnesota. It sells most of its power to a handful of mining and paper mill operations, some of which have slowed or shut down production as the pandemic disrupts the global economy.

"Today's proposal reflects Minnesota Power's concern that a lengthy rate process should not be a priority during the pandemic crisis," the company said in a statement.