Attorney General piles-on against Minnesota Power's rate hike request

For the second time in as many days, a state agency has weighed in loudly against Minnesota Power's proposal to raise its customers' electric bills.

Minnesota Attorney General Lori Swanson on Friday blasted the Duluth-based utility's request for a rate hike that is now being considered by the state Public Utilities Commission.

"Many families in the region continue to be financially squeezed and cannot afford an increase to their utility bills. It is particularly galling that the company seeks to disproportionately raise rates on families at a rate more than triple what it's seeking for its large power customers," Swanson said in a statement.

Swanson said Minnesota Power's $39 million rate hike request represents a 6.1 percent rate increase overall but hits residential customers for about a 15 percent hike compared to 4.36 percent for large industrial users like taconite plants that make up the majority of demand for the utility.

Swanson expressed her opinion in a formal filing with the state Public Utilities Commission. It follows the state Department of Commerce which filed documents on Thursday not only opposing Minnesota Power's increase request but also saying the utility should instead reduce bills by 2.6 percent.

Swanson's office, as did the Commerce Department, said they think Minnesota Power is asking for too large a profit margin for its shareholders. The Attorney General's Office asked the PUC to lower the rate Minnesota Power pays private investors, also known as return on equity, to 8.38 percent from the current rate of 10.38 percent — "a level more in line with the current market,'' she said.

Minnesota Power last fall asked the PUC for a major rate hike, saying it needed more income to pay for major upgrades to its electrical system and its move to new, non-polluting energy sources. The utility battled back against critics this week, saying its rate request, demand estimates and requested return for investors are in line with economic projections and other utilities.

In advance of their decision on the rate hike, expected later this year, the PUC has scheduled regional public hearings in Eveleth, Duluth, Grand Rapids and Little Falls later this month.