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MDU natural gas customers to see rate hike in 2021

MDU natural gas customers to see rate hike in 2021

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Montana-Dakota Utilities natural gas customers will see a rate hike that amounts to $3.57 per month for the average household beginning next year, at least initially.

The North Dakota Public Service Commission on Wednesday approved the company’s request for the increase to take effect Jan. 1, 2021. It’s an interim rate increase that likely will change after regulators make a decision on the company’s general rate case, which is expected after public input sessions and a hearing in March.

MDU is asking the PSC to ultimately approve a rate increase of $6.26 per month for the average household. The company seeks to collect an additional $9 million in annual revenues through the rate case.

The utility has 114,000 natural gas customers in North Dakota in 75 communities across the state, including Bismarck and Mandan.

The requested rate increase stems from infrastructure investments since the company’s last rate case in 2018, including $53 million spent since then to improve the reliability and safety of MDU’s natural gas service, spokesman Mark Hanson said. He added that increased property taxes also factor into the request.

He said the company sought to delay the date the interim rate would take effect by several months, knowing that some families are struggling financially amid the pandemic. Any final rates approved by the PSC likely would take effect in late spring, at which point the company hopes the economy is “a little more back to normal, when hopefully the impact would be different than if it were happening in November” at the height of the pandemic, Hanson said.

The PSC is tentatively planning to hold virtual public input sessions in early March to allow people to weigh in on the requested rate increase, with a three-day hearing slated for the end of that month during which time MDU will be asked to justify its request. Commissioners will finalize those plans at a later date.

The interim increase approved Wednesday was vetted by PSC staff, who concluded that it complies with state law. A utility company can receive an interim rate increase while the PSC wades through its rate case, a process that takes roughly seven months.

“What the law provides in the short term doesn’t necessarily mean the company will get what it wants in the end,” PSC Chairman Brian Kroshus said.

MDU customers could see a refund if the PSC next spring were to reject an increase or approve a lesser amount than the interim rate, according to the company and the PSC. If a greater amount is approved, customers would not have to make up the difference retroactively.

AARP North Dakota, which represents residents age 50 and older, has intervened in the rate case and will encourage its members and other MDU customers to participate in the public input sessions, State Director Josh Askvig said.

MDU’s proposed rate increase would “adversely impact” older residents, many of whom are on fixed incomes, he said.

“Those customers generally devote a higher percentage of their spending to utilities,” he said.

AARP also takes issue with varying rates MDU has proposed for different types of customers, as “residential users are going to end up shouldering more of the burden” than others such as industrial facilities, he said. MDU is asking the PSC to approve what amounts to a 7.8% increase in revenue from all customers, but residential customers would see a 12.5% increase.

The natural gas rate case comes on the heels of a rate hike for MDU’s electric service. The PSC earlier this fall approved a monthly increase of $2.95 for the average customer. That appears as a line item on bills, as it’s a rider separate from the company’s general electric rates.

The PSC also approved several requests Wednesday from Xcel Energy that will cause customers to see an uptick on their electric bills. The most significant is an interim rate increase of $6.63 per month for the average household in winter, and $7.99 per month in summer.

Those rates will remain in effect until the PSC makes a decision on the company’s general rate case. Xcel is asking for an increase of $8.37 per month in winter for the average household and $8.53 per month in summer.

Xcel serves customers in eastern North Dakota and in the Minot area.

Askvig said AARP is following Xcel’s request and is “exploring how to best stand up for our members in their customer service area as well.”

Reach Amy R. Sisk at 701-250-8252 or amy.sisk@bismarcktribune.com.

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