North Dakota regulators weigh natural gas rate increases

North Dakota Public Service Commission members, from left, Sheri Haugen-Hoffart, Randy Christmann and Julie Fedorchak conduct a public input session on proposed natural gas rate increases on July 29, 2024, in Bismarck. (Michael Achterling/North Dakota Monitor)

Two North Dakota natural gas utility providers are proposing to increase residential gas rates between 7.5% and 12.5% in coming months after holding public input sessions with the state’s Public Service Commission in July.

The increases would affect North Dakota residents who receive natural gas from Northern States Power Company, a part of Xcel Energy, and Montana-Dakota Utilities.

The Xcel rate increase would raise an estimated $8.5 million in revenue and amount to a monthly average increase of $6.75 per residential customer.

The MDU rate increase would raise an estimated $11.6 million in revenue and increase a residential customer’s monthly gas bill by about $5.90.

Both companies filed their proposed rate increases with the commission in December and participated in public input sessions to answer questions about the increases.

Alex Nisbet, regulatory policy specialist for Xcel Energy, told members of the commission on Monday the reason for the proposed rate increase is to recoup costs for meter replacements, upgrading outdated infrastructure, relocating infrastructure due to Fargo-Moorhead’s flood diversion project and adding high pressure distribution projects in the Grand Forks and West Fargo areas.

“After we’d done all of our projections and our various revenue requirements, we saw that we were going to end up with an $8.5 million deficiency for the approved rates from our last natural gas rate case,” Nisbet said.

He said Xcel, which already implements a flat delivery charge for customers, plans to add a distribution charge based on residential volume-use of natural gas. A higher delivery fee is expected to increase monthly gas bills by about $2.75 and the new distribution charge would add about $4 per month.

“Between those two new increases, that’s what would get us to our proposed rate increase,” Nisbet said.

The Montana-Dakota Utilities natural gas rate increase was due to pipeline replacement projects and increased costs to operate and maintain its natural gas system, according to the company’s website .

The North Dakota chapter of AARP filed comments with the commission to intervene on behalf of Red River Valley residents to oppose the Xcel increase.

In a statement, the organization said increases in utilities can be “detrimental” low- and fixed-income residents.

“With this rate increase request, Xcel is placing too much burden on the residential customers it serves,” said Josh Askvig, state director for AARP North Dakota, in a statement. “Xcel Energy’s proposed 12.5% increase is well above the national average, and we encourage the NDPSC to reject this unreasonable increase.”

The group also applauded efforts made by North Dakotans who filed comments with the PSC in 2022, which they claim helped shave about $2 million off of Xcel Energy’s previous natural gas rate increase request.

Commissioner Randy Christmann, chair of the PSC, said he thought the time between rate increase requests was usually longer than two years.

“The last one had a 2022 test year and usually it’s about three years between rate cases instead of two,” Christmann said.

Prior to the 2022 rate increase, the last time natural gas rates were requested to be adjusted by Xcel was in 2007, according to information provided during the hearing.

Xcel serves about 63,000 customers between Grand Forks to Fargo to Oriska and includes about 1,150 miles of distribution pipelines, according to Xcel Energy.

MDU serves 115,000 natural gas customers in 76 North Dakota communities.

The AARP also intervened in the MDU rate case, arguing in a petition that residential customers would see larger increases than some large customers.

Members of the public can file comments on the proposed rate increases with the Public Service Commission via email at NDPSC@nd.gov . The public can call 701-328-2400 for more information.

Comments for the Xcel rate increase must be filed before a public hearing set for Sept. 3. Comments for the MDU rate increase must be filed before its public hearing on Sept. 30.

If the natural gas rate increases are approved by the commission, customers could see the rates implemented by the end of 2024.

The PSC approved increased interim gas rates to increase revenue by $7.9 million for Xcel Energy that went into effect March 1 and $10.1 million for MDU, which went into effect Jan. 1. Customers will be issued refunds if those amounts are decreased by the PSC during the final version of the rate increases.

SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX

DONATE: SUPPORT NEWS YOU TRUST