What drives the need for a rate case?
Rising costs and growing energy use
Rising costs
- Each year we make significant capital investments in new technologies that allow us to produce and deliver electricity more efficiently and meet growing demand.
- Overall costs to run our business, including necessities such as fuel, poles, substations, and transmission lines, continue to rise.
- Unlike other Minnesota electric utilities, not all of our retail electric rates include a cost-of-energy adjustment. Customers that have rates without a cost-of-energy adjustment don't see the fluctuations in fuel and purchased-power costs passed through to them in their monthly electric bills. Dramatic increases in those costs, which currently are not fully recovered, require that we reset the amount of fuel and purchased-power costs built into our base rates.
Growing energy use
- Sustained growth in air-conditioning, penetration of electronics, and newly built homes that tend to be larger than existing homes contribute to growing energy use. This growth has occurred despite our conservation efforts.
- To meet our customer needs and ensure that we have all the competitively priced electricity necessary, Otter Tail Power Company and other utilities will need to increase rates to pay for new lines and energy resources while continuing to maintain our current electric systems.
