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Otter Tail Power Company Requests Minnesota Rate Increase

OTTR
  • Otter Tail Power Company filed a request with the Minnesota PUC to increase electric rates for its Minnesota customers, initiating an 18- to 24-month review process.
  • The company seeks interim rate approval to take effect on January 1, 2026, with a proposed overall bill increase of approximately 12.6%.
  • Under the interim proposal, a typical residential customer's bill would rise by $13.15 monthly, while a typical business customer's bill would increase by $43.67 monthly.
  • The PUC is expected to issue its final rate decision in the first quarter of 2027, with final rates likely impacting bills in the second or third quarter of 2027.
  • If approved as filed, the final net rate increase would total approximately $44.8 million, or 17.7%, resulting in a typical residential bill increase of $18.14 monthly & a typical business increase of $73.20 monthly.
  • Customers will receive refunds with interest if final rates are lower than interim rates, but the company will not collect the difference if final rates are higher.
  • The rate request aims to fund infrastructure investments, such as replacing 50+ year-old poles & insulators, to ensure long-term reliability.
  • Grid resilience efforts include expanding underground lines to cover 28% of the distribution system & increasing vegetation management to prevent service disruptions.
  • The request includes costs associated with retiring the co-owned, coal-fired Coyote Station by the end of 2031 to support a transition to renewable energy resources.
  • Otter Tail Power attributes the primary drivers of this request to inflation since the last 2021 rate review, which increased material, labor, & equipment costs.
  • Company President Tim Rogelstad stated the rate increase is not driven by data centers but by the real costs of maintaining & strengthening the electric system.
  • Otter Tail Power claims its customers will continue to pay less for electricity than almost anywhere else in the region despite the proposed increases.
  • Otter Tail Corporation is a wholly-owned subsidiary of Otter Tail Corporation (NASDAQ: OTTR) with corporate offices in Fergus Falls, Minnesota, & Fargo, North Dakota.