Minnesota Power Proposes Plan to Resolve Rate Request in Response to Economic Challenges of COVID-19

Minnesota Power, a utility division of ALLETE (NYSE: ALE), today proposed a resolution to its November 2019 rate review that would reduce customers’ monthly bills and provide refunds. Minnesota Power cited the economic uncertainty related to the COVID-19 crisis in its decision to seek early resolution of its rate review, submitted to the Minnesota Public Utilities Commission (MPUC) last fall.

“Since Minnesota Power initially filed its rate request last fall, the COVID-19 virus has spread and is now impacting the health and financial well-being of people around the state and here in our communities. We hope resolving our rate case will provide some much-needed relief for our customers in these difficult times,” ALLETE CEO Bethany Owen said. “Especially during this pandemic, we know that our mission of delivering safe, reliable and affordable energy is even more important to our communities, homes, hospitals and businesses.”

On Nov. 1, 2019, Minnesota Power requested a rate increase of approximately $66 million or a 10.59% overall increase to cover rising operating expenses, expiring contracts and regulatory costs. The proposal filed today would limit this request to just the amount needed to recover income from a large, wholesale market contract that expires this month. This 10-year contract, which reduced customers’ monthly bills as Minnesota Power sold excess energy, expires April 30.

If today’s proposal is approved by regulators, Minnesota Power customer rates will be reduced from the current MPUC-approved interim increase of 5.8% to an average increase across customer classes of 4.1%, which is much lower than the increase of 10.59% proposed in the initial rate filing.

In addition to lowering customers’ future monthly bills, this proposal would provide a refund of interim rates for all customers of approximately $12 million. The company anticipates refunds would occur later this summer. The company's proposal will also delay any future rate proposal until at least March 1, 2021.

The proposal would also reclassify wholesale margin credits as part of the separate Resource Adjustment line item on bills, rather than as part of base rates, similar to what other utilities in the state do. Customers will be billed or credited monthly based on actual power sales, rather than an amount estimated during the most recent rate decision. This will not reduce the level of oversight by the MPUC and will not immediately impact the monthly bill of a typical customer.