State regulators trim and approve Montana-Dakota Utilities rate increases

South Dakota Public Utilities Commissioners, from left, Chris Nelson, Kristie Fiegen and Gary Hanson participate in a meeting Sept. 6, 2023, at the Capitol in Pierre. (Joshua Haiar/South Dakota Searchlight)

Montana-Dakota Utilities received permission from state regulators Tuesday to raise its rates for South Dakota natural gas and electrical customers, though not by as much as the company requested.

The decision comes after a year-long analysis of the company’s request to raise its electrical rates by 17% and its natural gas rates by 11%. Those increases would have generated $10.4 million in additional annual revenue for the company.

The state Public Utilities Commission’s three elected members approved increases of about 8%, generating an estimated $6.66 million in total additional annual revenue.

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A typical residential electrical customer will see an average bill increase of $8.26 per month, according to the commission, and a typical natural gas user will see an average bill increase of $4.45 per month.

Commission Chairperson Kristie Fiegen said in a news release that the commission is required to “ensure that rates are reasonable and just and that the company also gets a fair rate of return.”

“We often hear customers ask us not to increase their rates, but we have to abide by the law, and that’s what we’ve done today,” Fiegen said.

The release noted that the company hadn’t had a rate increase in eight years, and said total inflation in that time was over 30%.

MDU cited investments made since the last rate increase and increases in operations expenses, maintenance expenses and property tax payments as being among the factors driving the rate increases.

MDU submitted applications for both rate increases on Aug. 15, 2023. New rates will go into effect Sept. 1. As part of the settlements with the commission, the company agreed to a moratorium on additional base rate increases until March 1, 2027.

The company implemented interim rate increases for customers on March 1. Because the rates approved by the commission are lower than the interim rates, the company must refund the difference, plus 7% interest, to customers as bill credits no later than Nov. 29.

MDU serves approximately 64,600 natural gas customers and 8,500 electric customers in South Dakota.

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