FOR IMMEDIATE RELEASE: June 7, 2016                    
CONTACT: Leah Mohr, deputy executive director, South Dakota Public Utilities Commission, (605) 773-3201 or (605) 280-4327

PUC allows Montana-Dakota Utilities Co. natural gas and electric rate increases

PIERRE, S.D. – Today the South Dakota Public Utilities Commission approved rate increases for Montana-Dakota Utilities Co.’s electric and natural gas customers in the state. Both increases were less than the company requested as a result of settlement agreements between Montana-Dakota, PUC staff, and, in the natural gas case, the Federal Executive Agencies, an intervenor representing the interests of Ellsworth Air Force Base. The electric rate case is the first base electric rate increase to be implemented by Montana-Dakota since 1985.

A typical residential customer using Montana-Dakota’s natural gas service will see an average monthly increase of approximately $1.49. The company’s application sought to raise rates to bring in additional annual revenue of $1.5 million. The rate approved by the commission allows the company additional annual revenue of $1.2 million.

The approved electric rate increase represented a much lower increase than what was requested. This was achieved as a result of negotiations and a settlement agreed upon by the company and PUC staff and accepted by the commission. The company requested a rate increase to generate an additional $2.7 million annually. The approved rates will allow additional annual revenues of approximately $1.4 million. A typical residential electric customer will see an average monthly increase of approximately $8.40. Montana-Dakota cited investments related to federal regulations, additional generation resources and transmission as the need to raise rates.

The electric rate increase is represented by four components: an increase in base rates, an infrastructure rider, a transmission cost recovery rider and credits to customers as a result of the federal Production Tax Credit associated with two of the company’s wind energy facilities.

The infrastructure rider accounts for the South Dakota-only portion of recoverable costs related to the Thunder Spirit Wind Project, a 107.5-megawatt wind farm Montana-Dakota owns near Hettinger, North Dakota. The transmission cost recovery rider will recover costs associated with Montana-Dakota’s participation in the Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP). MISO and SPP are transmission organizations that operate regional electric grids and administer wholesale electricity markets. Both have a vital role in providing reliability to the company and its customers. Both types of riders are allowed by state law.

PUC Chairman Chris Nelson addressed the rate case process. “In both cases, I believe the settlements are fair and comply with what South Dakota law requires. The detailed settlements indicate the great lengths that PUC staff went to in order to reach an agreement benefitting ratepayers,” Nelson said.

“It is noteworthy that 31 years have passed since MDU last approached the PUC to ask for an increase in their electric base rates. That is a solid indication the company has been working hard for three decades to hold costs down for their customers,” PUC Vice Chairperson Kristie Fiegen stated. “I am pleased at the result of the settlement negotiations between the company and PUC staff and applaud the efforts of all involved.”

“When the commission evaluates a rate increase request, we take very seriously our responsibility to protect the ratepayers as well as the utility,” said PUC Commissioner Gary Hanson.  “Customers need safe, reliable service. For MDU to provide that, they need sound infrastructure. The cases we voted on today provided excellent background and explanation about how the company will serve customers in a manner that keeps the rates as low as possible,” he continued. 

The company submitted both rate increase applications to the PUC on June 30, 2015. The new rates will go into effect July 1, 2016. Montana-Dakota implemented interim rates to electric and natural gas customers on Jan. 1, 2016, as allowed by state law. Because the approved rates are lower than the interim rates, the company will refund the difference, with 7 percent interest. Refunds will be issued to customers as bill credits no later than Oct. 1, 2016.

Montana-Dakota serves 57,600 natural gas customers and 8,600 electric customers in South Dakota.

The Montana-Dakota rate increase request dockets can be viewed on the PUC's website at www.puc.sd.gov, Commission Actions, Electric Dockets, 2015 Electric Dockets,
EL15-024 – In the Matter of the Application of Montana-Dakota Utilities Co., a Division of MDU Resources Group, Inc. for Authority to Increase Its Electric Rates; and Natural Gas Dockets, 2015 Natural Gas Dockets, NG15-005 – In the Matter of the Application of Montana-Dakota Utilities Co., a Division of MDU Resources Group, Inc. for Authority to Increase its Natural Gas Rates.  

-30-