PSC urges Otter Tail customers to join balance billing program
BISMARCK -- The Public Service Commission won't approve an Otter Tail Power Co. proposal to stretch customers' payments for this winter's high electrical bills out into the summer months or beyond.
Instead they're urging Otter Tail's customers to join the company's Even Monthly Payment plan, in which all bills are about the same amount throughout the year.
Even so, bills for customers who are billed early in each monthly cycle will begin going out Monday and they will not be able to apply the balanced billing plan to their February power usage, which will cost 5.15 cents per kilowatt-hour.
Normally, Otter Tail does not allow customers who are behind on their bills to sign up for Even Monthly Payment until they are caught up.
The PSC said in a news release Friday afternoon that the company has agreed to relax the policy and allow those customers to put their past-due amount into the Even Monthly Payment plan.
Customers also can make special arrangements with the company for a special payment plan if they can't pay their bills all at once. This has always been Otter Tail's policy.
Otter Tail's electrical rates have shot up because the company shut down its Big Stone power plant in northeastern South Dakota from Oct. 24-Dec. 24 for pollution control upgrades and had to buy power on the open market. Though it planned the shutdown and arranged to buy power ahead the shutdown, the company also found a bad turbine that needed to be repaired and the shutdown lasted longer than expected. The shutdown also took place later in the fall than had been planned.
Under state law when a North Dakota utility's costs for power or natural gas goes up, it is allowed to pass those costs on to its customers. When Otter Tail did this after the Big Stone shutdown, it caused a dramatic spike in bills, especially for customers who heat with electricity. Their bills have jumped by hundreds of dollars.
Otter Tail serves 57,000 North Dakota customers, including the cities of Wahpeton, Jamestown and Devils Lake. It is headquartered in Fergus Falls, Minn.
The PSC has receiving dozens of phone calls, e-mails and in-person visits from angry or worried Otter Tail customers.
Commissioners said at a work session with Otter Tail officials Friday that saw they several problems with the company's request to merely stretch the big bills out over more months. One stumbling block was the company's plan to have customers pay a 6.33 percent interest rate on the deferred costs.
"I am really struggling a lot with the interest question," said Commission President Susan Wefald. She said that when natural gas utilities have increases in their gas supply prices and extend the increases to customers over a long term, the interest rate matches the rates on a three-month treasury bill. Wefald said she thought that rate was about 3.2 percent now. At Monday's treasury bill auction, the discount rate of a three-month treasury bill was 2.16 percent, down from 2.2 percent last week.
"This isn't a major part of our proposal," said the company's associate general counsel, Bruce Gerhardson.
The toll-free number for Otter Tail is 800-257-4044. The PSC's number is 701-328-2400.
Janell Cole works for Forum Communications Co., which owns The Dickinson Press.