MDU rate rise goes before hearings

BISMARCK, NORTH DAKOTA - North Dakota regulators began exploring whether to trim Montana-Dakota Utilities Co.'s request for a 10 percent electric rate increase.

The proposal would increase the minimum charge that the Bismarck utility's customers pay each month from $5.50 to $10.64, whether or not they use any electricity.

Montana-Dakota's electric rates would also be increased. In all, a residential customer who uses about 750 kilowatt-hours of power each month will pay an extra $5.50, or $66 a year, state Public Service Commission filings say. If the request is granted in full, MDU would collect about $11.5 million in additional revenue each year.

The commission began two days of formal hearings to allow the three commissioners and other individuals who have formally intervened in the case to question MDU executives about the rate boost. The PSC will decide the case after the formal hearings conclude.

A report by the commission's consultant, George Mathai, of Oklahoma City, a former public utility analyst, asserts that MDU's North Dakota ratepayers should not have to pay $2.8 million annually to defray the cost and provide an investment return for the utility's construction of wind energy projects in southeastern Montana and southwestern North Dakota.

The projects were built primarily because of renewable energy requirements in Montana, Mathai said in a report to the commission.

"MDU has not demonstrated any need for the higher cost of wind energy for the North Dakota customers," Mathai said. "In fact, its recent resource plans have raised doubts that question the prudence of these investments."

MDU executives disputed Mathai's conclusions. David Goodin, MDU's president and chief executive officer, said ratepayers in both North Dakota and Montana benefited from its wind energy investments.

"The wind facilities provide customers with protection from future price volatility associated with fossil fuel generation... and reduce environmental emissions," Goodin said. In addition, it reduces MDU's need to buy electricity on the outside market, Goodin said.