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North Dakota regulators approve MDU gas rate hike

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013119-nws-cold.jpg (copy)

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

The typical household with natural gas service from Montana-Dakota Utilities can expect to pay about $4.21 more per month than it did last year under new rates that North Dakota regulators approved Wednesday.

MDU has charged customers higher interim rates since the start of 2021 while the Public Service Commission evaluated the utility’s application. Wednesday’s order from the commission works out to about $0.64 per month more for the average household than what families have been paying so far in 2021.

MDU requested the rate increase to cover the cost of replacing aging pipelines that deliver natural gas to customers. The utility’s staff told the PSC earlier this year that about 25% of its pipelines were installed over 50 years ago, and some date to the 1920s.

“I view our job as regulators to balance system safety and reliability with cost,” Commissioner Brian Kroshus said. “We want to keep delivery of gas to customers in North Dakota as low cost as possible and at the same time ensure it arrives at each household in a safe and efficient manner.”

Commissioners said MDU has been working for several years to replace pipe in the communities it serves. That work will continue as the utility is expected to collect an additional $6.9 million per year under the new rates.

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

The new rates are expected to take effect June 1, according to company spokesman Mark Hanson. He said MDU was pleased with the commission's decision, as the regulators approved terms reached in a settlement agreement between PSC staff, MDU and AARP North Dakota.

AARP had intervened in the rate case amid concerns that higher rates would adversely impact older residents, many of whom are on fixed incomes. Initially, MDU sought an increase that would amount to another $6.26 per month for the average household, but that figure dropped as the various parties negotiated a settlement.

"At the end of the day, we were happy because of our involvement that we saved consumers over $1 million," AARP State Director Josh Askvig said.

MDU gas customers’ bills are likely to go up again soon for another reason: the February cold snap that plagued the central United States down to Texas. The frigid weather led to a gas shortage and a massive spike in prices, and MDU and the PSC are trying to figure out how to best spread out those costs to customers.

MDU has estimated the average North Dakota customer will be on the hook for $80 to $100 to cover the price spike. The company is proposing the cost be spread out on bills over the next year and a half.

The utility pitched an idea to the PSC last month that customers pay a lower rate in winter months and a higher rate in summer months so as to avoid sticker shock during the winter heating season.

The PSC says the public can comment on the issue in writing or request a formal hearing by May 25.

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

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