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MDU seeks higher rates to replace aging gas pipes, prompting customer concerns

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Smoke rises from chimneys in east Bismarck as furnaces heat up homes on a cold winter morning in January 2019.

Montana-Dakota Utilities wants to charge its natural gas customers more to replace aging pipelines, but some residents don’t want to see higher bills.

“It affects our quality of life every time one of these essential services goes up because we’re on fixed incomes,” Bismarck resident Howard Burns Sr. said.

Burns, 76, offered his thoughts on the company’s proposed rate increase Tuesday to members of the North Dakota Public Service Commission during a session to gather public input.

MDU is asking the PSC for approval to raise gas rates by $5.54 per month for the average residential customer. That’s down slightly from the company’s initial request, which would have equated to an average of $6.26 per month. The exact amount customers’ bills would increase depends on their gas usage.

Burns said he and his wife try to keep their thermostat turned down as low as they can to save on their heating bill. They pay for it, along with a host of other necessities, through Social Security benefits and a pension.

He suggested MDU look for efficiencies within its own operations and seek innovative ways to cut costs.

The company’s proposed rate increase would help replace old pipelines that deliver natural gas to customers, said Travis Jacobson, MDU’s director of regulatory affairs. He spoke during a presentation at the start of the public input session.

About 25% of MDU’s pipelines were installed over 50 years ago, and some date to the 1920s, he said.

“Starting in 2017, we began a more focused approach to replacement of pipelines within the state of North Dakota, and we continue to do that,” Jacobson said.

The company regularly tests for leaks and examines pipe, a process that “really drives to get the most risky pipe out of the ground as quickly as we can,” he said.

MDU spent $10 million between 2017 and 2019 toward that effort and estimates it will need to spend another $43 million through 2024 to ensure a safe and reliable system, according to Jacobson.

If the PSC were to approve the full request, the company would raise another $7.7 million in annual revenue to help pay those costs.

Under MDU’s proposal, residential customers would see a greater percentage increase in their rates than would larger commercial customers.

“It appears MDU is seeking the rate increase to make residential customers bear most of this increase,” Burns said. “It goes without saying that this is unfair to the residential customers.”

Revenue collected from larger customers covers the cost to provide gas service to them, whereas revenue from residential customers does not, said Ronald Amen, a consultant working with MDU.

Rather than lower rates for larger customers while raising rates for others, MDU felt it was important to request that all classes contribute to the overall revenue increase, he said.

The PSC will dig deeper into the company’s proposed rate increase during a formal hearing beginning March 17.

AARP North Dakota has intervened in the case, which allows it to participate in the hearing by providing testimony and cross-examining MDU representatives. The association advocates for people age 50 and older and has concerns that a jump in rates would adversely impact older residents.

MDU provides gas service to 115,000 customers across 75 communities in North Dakota, including Bismarck and Mandan.

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

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