In a defeat for struggling northern Minnesota industries, state regulators on Thursday rejected a proposal to cut electric bills for iron mines and pulp mills that would have significantly increased rates for residential customers of a Duluth-based power company.
Minnesota Power proposed to give a 5 percent rate cut to mines and slightly less to pulp mills to help them compete in world markets. But the state Public Utilities Commission, which regulates investor-owned utilities, concluded the company didn't present enough evidence of the plan's benefits.
That leaves open the door for Minnesota Power to submit a revised plan or additional information to back up its original one. The Minnesota Legislature last year authorized electric rate relief for "energy-intensive, trade-exposed" industries, but left the details to the five-member commission.
Consumer advocates and two state agencies that represent ratepayers opposed the plan, which would boost residential electric rates up to 14.5 percent. A typical homeowner's monthly bill would go up about $11.45.
If rates went up that much, consumer advocates said, struggling customers probably couldn't pay bills, and would face debt collectors and electric power cutoffs.
"They are squeezed and they are squeezed in that area more than any other area of the state," said Pam Marshall, executive director of the Energy CENTS Coalition, an advocacy group for low-income ratepayers.
But industry representatives said the hard-hit companies need lower electric rates to compete.
They argued that the plan would correct a long-standing unfairness to large power users whose rates exceed their cost of service, subsidizing residential rates.