Rate case FAQs
Information for our customers
- What is a "rate case?"
- Why is Otter Tail Power Company asking for a rate increase?
- Why do you need rate increases when you recover fuel and purchased-power costs through the Resource/Energy Adjustment?
- Why are the company's fuel and purchased-power costs passed on to customers?
- If natural gas prices go down, will you decrease your rates?
- Is Otter Tail Power Company using renewable resources?
- Are you doing anything to help low-income customers?
- Will the rate case have a similar impact on all customers?
- How can I find out more about rate case activity?
A rate case is a formal process regulated utilities must go through to increase rates. Get an update on rate case activity in Minnesota, North Dakota, and South Dakota.
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Why are Otter Tail Power Company rates increasing?
Environmental objectives, the need for diversity of fuel mix and resources, and long-term growth in customer demand for energy are increasing costs. Costs for financing, fuel, and maintaining, upgrading, and expanding our electric system are increasing as well.
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Why do you need rate increases when you recover fuel and purchased-power costs through the Resource / Energy Adjustment?
We don't recover all of our fuel and purchased-power costs through the Resource/Energy 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, continue to rise. Unless we complete successful rate cases 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 (energy) 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 outlines our objectives related to wind generation.
- 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. North Dakota and South Dakota have Renewable Energy Objectives of 10 percent of electrical energy coming from renewable resources by 2015.
- 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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Do rate cases 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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How can I find out more about rate case activity?
If you would like more information, please contact us at 800-257-4044.
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