An Otter Tail Company

Rate case FAQs

Information for our customers

 

What is a “rate case?”

A rate case is a formal process regulated utilities must go through to increase rates.
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What does a rate case mean to me?

Otter Tail Power Company will continue to produce and deliver your electricity as reliably and economically as possible before, during, and after the rate case process.
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Why is Otter Tail Power Company asking for a rate increase?

Two reasons—rising costs and growing energy use.
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What has Otter Tail Power Company done to avoid a rate increase?

Many efforts to keep rates low have helped Otter Tail Power Company avoid a rate increase.
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Why have I seen increases in my electric bill since 2002 if base rates haven't increased since 1986?

Otter Tail Power Company—through numerous efforts to keep rates low—has avoided increasing base electric rates since 1986. In the past four years overall electric bills have increased, for the most part, because of the higher cost of fuel and purchased power needed to generate electricity. In addition, many customers are using more electricity. Increases in fuel costs are passed on to customers without any markup and are reflected in the Resource Adjustment line item on the bill. This is not uncommon. Retail natural gas suppliers also have a Resource Adjustment.
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Why do you need a rate increase when you recover fuel and purchased-power costs through the Resource Adjustment?

We don't recover all of our fuel and purchased-power costs through the Resource Adjustment. Energy, fuel, and purchased power make up only part of the rate customers pay. Distribution, transmission, and customer service costs also are included. The overall costs to run our business, including necessities such as poles, substations, and transmission lines, have risen since our last rate case in 1986. Unless we complete a successful rate case we cannot recover rising costs through our current pricing.
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Why are the company's fuel and purchased-power costs passed on to customers?

The costs of raw materials are included in the price customers pay for products. In the case of an electric utility, the raw materials are fuel and purchased-power, and the product is electricity.
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If natural gas prices go down, will you decrease your rates?

Otter Tail Power Company works hard to keep your electric bill as low as possible. If natural gas prices go down our energy costs likely would be lower, which would be reflected in your resource adjustment. Although Otter Tail Power Company doesn't have a significant amount of generation that uses natural gas, natural gas prices do impact the market price of power, which impacts the price we pay for purchases to serve customers in our service area.
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Is Otter Tail Power Company using renewable resources?

We continually evaluate cost-effective renewable resources and include them in our resource portfolio.

  • Our most recent resource plan calls for up to 160 megawatts of new wind generation by 2015.
  • We have been purchasing approximately 25 MW of electricity from wind generation resources for a number of years, but owning a portion of the new Langdon Wind Energy Center is one step our company is taking toward meeting our resource plan target. In addition to the 40.5 MW of electricity that will be produced by the turbines we own at the Langdon Center, we have a 25-year agreement with FPL Energy to purchase an additional 19.5 MW of output from that wind farm annually.
  • On February 22, 2007, Minnesota Governor Tim Pawlenty signed into law a 25 by 25 renewable energy standard that requires electric companies serving Minnesota to acquire at least 25 percent of their electrical energy from renewable resources by 2025.
  • Since 2002 our customers have been able to purchase 100 percent of their electricity from wind generation through our TailWinds program.

We must have a balance of reliable and economical resources to continue to satisfy customer needs.
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Are you doing anything to help low-income customers?

Our efforts to assist our low-income customers include:

  • Assisting customers in evaluating the energy efficiency of their homes.
  • Working with customers on reasonable bill payment options.
  • Advocating for more funding of federal low-income assistance programs.
  • Connecting our low-income customers to other state resources for assistance with their energy needs.
  • Providing low-income customers with special programs approved by the state regulatory agencies.
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Will the rate case have a similar impact on all customers?

Our goal is to have each class of customers on a base rate closer to what it actually costs to serve them. This may result in some customer classes experiencing larger or smaller rate increases than the overall average rate increase requested.
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Are you changing rates in all three states?

Currently we intend to file a rate case in North Dakota by the end of 2008 and in South Dakota within the next two years.
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How can I find out more about this rate case?

If you would like more information, please contact us at 800-257-4044.
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