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FOR IMMEDIATE RELEASE: Tuesday, April 19, 2011
CONTACT: Leah Mohr, deputy executive director, South Dakota Public Utilities Commission, (605) 773-3201 or (605) 280-4327

Public Utilities Commission approves Otter Tail Power Co. rate increase

PIERRE, S.D. – The South Dakota Public Utilities Commission approved a 2.32 percent rate increase for Otter Tail Power Co. this week. The approval came after an extensive review and negotiation process between PUC staff and company officials.

The rate increase will generate approximately $642,500 in annual revenues for the company, more than $2.1 million less than the company requested. Otter Tail Power Co. applied to the commission in August 2010 for permission to increase its rates by 9.96 percent to raise approximately $2.8 million in additional annual revenue. The commission approved the 2.32 percent increase at its regular meeting on April 19, 2011.

The company sought the rate increase to recover costs associated with additional rate base investments, including the addition of the Luverne wind farm and associated depreciation expense; Big Stone II development costs; and increases in operating costs.

PUC staff and Otter Tail Power Co. negotiated all points of the case, with additional review spent on the issue of the Luverne wind farm. Staff agreed that including the wind farm in consumer rates now is a better option for rate payers than the alternative of the company purchasing the needed energy from other sources later.

"This decision today clearly leads to a stronger company in the future," PUC Chairman Steve Kolbeck said. "The increase was held at a level that enables Otter Tail to make necessary investments in order to serve its South Dakota customers today and down the road."

Commissioners discussed the need of electric companies to balance providing reliable, sustainable and environmentally compatible energy to rate payers in an affordable manner.

"I am a strong proponent of renewable energy, as long as it is affordable to rate payers," said PUC Vice Chairman Gary Hanson. "The circumstances surrounding the inclusion of this wind farm are unique and I agree that it is an appropriate treatment in this case."

The PUC staff was represented by two attorneys and five analysts who spent months reviewing data and meeting with Otter Tail Power Co. officials.

Commissioner Chris Nelson offered praise to the parties for their diligence in thoroughly vetting the case. "I greatly appreciate staff and Otter Tail Power working to find common ground and the right answer," he said.

Otter Tail Power Co. serves about 11,700 customers in northeastern South Dakota. Its last rate increase affecting South Dakota customers occurred in 2009.  

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Visit the South Dakota Public Utilities Commission docket EL10-011 online for more information of theOtter Tail Power Co.'s rate increase request.