March 03, 2017

Minnesota Public Utilities Commission grants increase in Otter Tail Power Company rates

Environmental technologies, infrastructure improvements, rising costs 

On March 2, 2017, the Minnesota Public Utilities Commission (MPUC) granted Otter Tail Power Company a revenue increase to help pay for environmental technologies, infrastructure improvements, and rising costs associated with providing safe, reliable, environmentally responsible electricity.

Otter Tail Power Company asked permission from the MPUC, in its modified request, to increase rates by $14.6 million, or about 7.4 percent. While it will take time to calculate the dollar impact of the MPUC’s decisions on numerous and complex issues, the rate change will be less than the company requested.

“We appreciate that the commissioners recognize the importance of recovering costs associated with serving our customers,” said Tim Rogelstad, Otter Tail Power Company president. “While we didn’t receive the revenue increase that we thoroughly vetted in our testimony, the commissioners and the administrative law judge (ALJ) agreed with our proposals on many of the issues in our case." 

The MPUC set Otter Tail Power Company’s return on equity at 9.41 percent, based on the Minnesota Department of Commerce’s proposed range of 8.13 percent to 9.85 percent. While the Department of Commerce argued for 8.98 percent, which is the midpoint of its range, the commissioners granted a 9.41 percent ROE based on Otter Tail Power Company’s exceptional performance and strong customer satisfaction, along with other factors specific to the company. "I’m disappointed in the range that the MPUC established,” said Rogelstad. “But I’m pleased that the commissioners deemed it prudent to grant us an ROE at the upper end of its range. This ROE allows us to continue our commitment to growth and success for our company and the rural communities we serve.”

As part of its initial filing, the company increased rates on an interim, or temporary, basis beginning April 16, 2016. Because the MPUC final decision will result in a revenue increase of less than the company collected during interim rates, the company will refund customers the difference with interest. “The parties have the opportunity to request rehearing on select items after receiving the final written order, so we don’t yet know exactly when the refund will occur,” said Rogelstad. 

Otter Tail Power Company will propose to implement the approved rates approximately 120 days after the MPUC final order becomes effective, likely November 2017. 

About Otter Tail Power Company

Otter Tail Power Company, a subsidiary of Otter Tail Corporation (NASDAQ Global Select Market: OTTR), is headquartered in Fergus Falls, Minnesota. With a balanced commitment to environmental, economic, and community stewardship, the company 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 otpco.com. To learn more about Otter Tail Corporation visit ottertail.com.