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North Dakota Public Service Commission grants increase in Otter Tail Power Company rates
Fergus Falls, Minnesota - November 25, 2009 Today the North Dakota Public Service Commission (PSC) granted Otter Tail Power Company a revenue increase of $3.6 million, or about 3 percent. This increase is over the amount customers paid in 2007 including the Energy Adjustment, which will continue to fluctuate with changes in the costs associated with purchased power and fuel that the company uses to serve its customers.“This is our first rate case in North Dakota since 1982,” said Chuck MacFarlane, Otter Tail Power Company president and CEO. “As the costs associated with providing reliable electricity continue to rise, we appreciate that the commission recognized our need for a rate increase. And although the commissioners granted a revenue increase that is less than the total amount we initially requested, they agreed with our proposals on many of the issues in the case.”Some customers will see less than the overall revenue increase of 3 percent and some will see more, based on their electric service rate selection and the amount of electricity they use. And because the costs associated with providing reliable electricity vary by the time of year, rates during winter and summer seasons will have different prices.CHART GRAPHIC CAPTION: These charts help to demonstrate how the approved revenue increase will impact various firm-service customers. Customers on other Otter Tail Power Company rates, including the company’s discounted controlled-service rates, will see different impacts. Customers will receive notices explaining the PSC-approved rates along with their first electric service statements that reflect those rates, likely in December. The charts are examples and don’t include future increases or decreases to the Energy Adjustment or to other bill adjustments related to certain generation and transmission projects.One of the reasons some customers will see greater increases than others is a reduction in the use of declining block rates, which are rates that allow customers to pay less per kilowatt-hour as they use more electricity. Because higher-use customers will see a greater increase on their bills than lower-use customers, reducing the number of declining block rates and the price differentials associated with them encourages customers to save money by saving energy.As part of its decision in this case, the PSC also has requested that Otter Tail Power Company remove economic development costs from its regulated revenue requirement. To allow time for the company to complete or transition economic development projects in progress for 2010, the company will continue its economic development activities through 2010. Beginning in January 2011 an average North Dakota residential-class customer using about 835 kilowatt hours a month will see a rate reduction of 0.025 cents per kilowatt-hour or approximately 21 cents per month. “We don’t know the degree to which we’ll be able to assist North Dakota communities with economic development efforts once the rate reduction is in place,” said MacFarlane. “But we believe our efforts have been successful, important, and cost-effective, so we plan to make a case in our next rate filing for continuing them.”The company expects to implement final rates in December 2009. As part of its initial filing, the company increased rates on an interim, or temporary, basis beginning January 2, 2009. Because the PSC final decision results in a revenue increase of less than the company collected during the interim rate period, the company will refund customers the difference with interest. The company expects the refund to appear on customers’ January 2010 electric service statements.Otter Tail Power Company, a subsidiary of Otter Tail Corporation (NASDAQ Global Select Market: OTTR), is headquartered in Fergus Falls, Minnesota. It provides electricity and energy services to more than a quarter million people in Minnesota, North Dakota, and South Dakota. To learn more about Otter Tail Power Company visit www.otpco.com. To learn more about Otter Tail Corporation visit www.ottertail.com.-30-
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Media contact
- Cris Kling
- Director, Public Relations
- During business hours: 218-739-8297
- After business hours: 218-842-5579
- ckling@otpco.com
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