Regulators approve 15 percent increase to Otter Tail Power fixed fee

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Last Week, the Minnesota Public Utilities Commission approved an increase to Otter Tail Power’s monthly fixed fee from $8.50 to $9.75.

  • Otter Tail Power’s initial proposal called for a 56 percent increase in their monthly fixed fee from $8.50 to $13.30. The approved increase is just under 15 percent.
  • As the lead advocate in the case, Fresh Energy argued that an increase of any kind to the monthly fixed fee had little to no support in the record and instead proposed innovative rate design changes that could both drive greater energy efficiency and offer revenue certainty for the utility.
  • Though no rate design changes were ordered at the time of the decision, Otter Tail Power was ordered to explore options such as decoupling and time-of-use rates.

The case wraps up roughly a year after Minnesota-based investor-owned utility Otter Tail Power submitted its initial proposal. In February 2016, Otter Tail Power filed its first rate case since 2010, asking for an overall rate increase of 9.8 percent that would have increased revenue by more than $19 million. Fresh Energy intervened in the case to provide expert testimony challenging the requested customer charge increase, and recommending alternative rate designs.

Time of use rates would give customers more information and flexibility to choose whether they use more expensive power during times of peak demand or less expensive power during off-peak times. Decoupling modernizes a utility’s revenue collection in a way that removes disincentives for utilities to conserve energy.

Other utilities in Minnesota have already implemented decoupling programs as a way to modernize their revenue collection. Fresh Energy’s support for and advocacy in favor of these policies stems from the way decoupling can help utilities invest more heavily in energy efficiency programs – leading to more cost savings for consumers and the utility alike. More importantly, decoupling removes the need for utilities to implement increased monthly fixed fees that limit the ability for consumers to save money through conservation.

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