Montana-Dakota Utilities Co. electric customers will see refunds and reduced rates from the utility’s federal tax cut benefits.
In January, the North Dakota Public Service Commission ordered the company to report savings from its reduced federal income tax rate. As a result, it was determined MDU should return $8.5 million annually to customers, Commissioner Julie Fedorchak said.
After some discussion, the commissioners unanimously voted to amend the original proposal, which would have allowed the company to keep $300,000, to instead give the full value of the tax credit to ratepayers.
Commissioner Randy Christmann said he insisted the tax benefit be passed on.
“Today is the fulfillment of that effort,” he said.
Fedorchak said she hoped her motion to return the full value came as no surprise and she felt allowing a portion to be retained “for other needs that haven’t been vetted” would not have been right.
MDU spokesman Mark Hanson said the purpose of the $300,000 would have been to cover a portion of the investments the company has continued to make in infrastructure since January.
“This is something I went back and forth on,” Commissioner Brian Kroshus said. “The part I struggle with is I would have liked to have seen more data.”
The commission also passed rate changes for MDU natural gas customers and Otter Tail Power Company electric customers.
Commissioners granted MDU a $2.5 million, 2.3 percent, annual revenue increase. The company had originally asked for an increase of $5.9 million. An interim rate was passed and then reduced to $2.7 million in March to reflect tax savings. Because the rate approved Wednesday included a smaller increase than the interim, customers will receive a refund within 90 days of approval of a refund plan.
The new fixed basic service charge will be $20.87 per month for residential customers.
MDU was also denied a special cost recovery mechanism, or rider, that would have helped cover costs for replacement of aging pipeline. The company will be required to come back in front of the commission in May with a more detailed plan for replacement projects, ranking existing and potential threats and justifying timing of replacement.
Fedorchak said she felt information had been lacking on the need for the request, and Christmann said the agreement approved by the commission limits the company “to only what’s really needed.”
Otter Tail, which has some central North Dakota customers around Wilton, Washburn, Garrison, Max and Parshall, also received a rate increase reduced from its original request to reflect the tax cut benefit.
Commissioners approved the utility for a $4.6 million, 3.09 percent, increase in annual revenue to cover costs experienced by the company as it builds a new gas plant, adds renewable energy and retires an existing power plant, Fedorchak said.
The commissioners highlighted the fact that this is Otter Tail’s first rate increase request in a decade.
“That’s pretty amazing,” Fedorchak said.
Under the new rate, the fixed basic service charge will be $14 per month for residential customers. The company had been approved for a higher interim rate, so those excess collections will be refunded.