An Otter Tail Company

Minnesota rate case

2010 rate increase request

To bring rates closer to the actual cost of providing reliable electric service, we've asked the Minnesota Public Utilities Commission (PUC) for permission to increase rates by about 8 percent.

On June 1, 2010, to help cover the cost of service while the PUC considers this request, we implemented a commission-approved interim rate increase of approximately 3.8 percent. This interim increase will remain in effect until the PUC makes a final determination on our overall request, which is expected to occur in 2011.

Watch this 2-minute video to learn more about our rate increase request and how it impacts you.

Contributing factors

Operating cost recovery

  • Otter Tail Power Company looks for cost savings in every area of our business. Still, nonfuel operating and maintenance costs have increased by about $1.2 million since 2006, which was the base year for developing the rates that customers currently are paying.
  • We can make cuts and delay projects for a period of time without risk to our reliability standards and customer satisfaction. But that's not a sustainable solution for the long term.

Watch this 2-minute video to learn more about the financial strength that's necessary to maintain and upgrade our system to continue providing reliable service.

Big Stone II cost recovery

  • As a utility, our electric rates are based on the costs associated with providing service to our customers. That means that the costs we incur to pursue or implement sensible and necessary infrastructure to meet our customers' needs must be included in rates.
  • We asked to spread the recovery of Big Stone II costs over a five-year period. This means about a dollar a month on the average residential customer's bill.

Watch this 2-minute video to learn more about our request for Big Stone II cost recovery.

Wholesale energy margin decline

  • Our wholesale sales (electricity sales to other utilities) are one of the reasons we were able to avoid a rate increase for the 20 years between our previous two filings. Those sales helped us offset the amount we needed to charge our retail customers
  • Unfortunately the margins associated with those sales are 80 percent lower than they were just two years ago and we need to replace them in base rates.

Watch this 2-minute video to learn more about wholesale sales and the decline in wholesale energy margins.

Sensible financial planning

  • To continue to meet our customers' needs for reliable and economical electricity, we'll need access to low-cost financing for infrastructure additions.
  • While this requested rate increase doesn't include the cost of future infrastructure investments, this rate increase will help ensure the financial stability that lenders will be looking for.

Watch this 90-second video to learn more about how this rate increase will help us obtain future financing on the most favorable terms possible, which helps us save you money.

Energy-saving opportunities

You can help us manage the load on our system and maintain manageable rates when you conserve electricity.

Watch this 1-minute video for a brief description of these services.

Learn more

Customers received printed information with their June electric service statements showing the approved interim rate increase, the requested overall rate increase, and example monthly bill impacts for various customer classes. If final rates are lower than interim rates, we will refund customers the difference with interest. If final rates are higher than interim rates, the higher rates will become effective as of the date of the PUC order approving those rates.

Administrative Law Judge Kathleen Sheehy has scheduled public hearings so that customers and others have opportunities to present their views on the adequacy and quality of our service, the level of our rates, or other related matters. You do not need to be represented by an attorney to participate in these hearings.

Public Utilities Commission approval required

Otter Tail Power Company is a regulated utility, which means the Minnesota Public Utilities Commission, the South Dakota Public Utilities Commission, and the North Dakota Public Service Commission approve the amount we charge customers for producing and delivering their electricity.