ST. PAUL, Minn. (Legal Newsline) - New legislation has been called for by Minnesota Attorney General Lori Swanson to bring enhanced scrutiny to utility rates charged to customers for electricity and natural gas.
Since June 2008, Minnesota utilities have made eight requests for rate increases. Utilities have been allowed to raise rates by $188,471,000 in the six utility rate cases completed since 2006 and, in four currently-pending rate cases, the utilities are asking for rate hikes amounting to $104,056,000. Back-to-back rate hike requests have been made by Minnesota Power and Xcel Energy in 2008 and 2009.
"Electric and natural gas bills take a big bite out of most people's household budgets," Swanson said. "As regulated monopolies, utilities should be put to strict proof before they can raise people's rates for these essential services."
According to U.S. Census data, these rate increase requests come at a time when Minnesota households have lost 8.9 percent of their household income over the last decade. A Minnesota Management & Budget agency report says that at the same time, nearly 15 percent of Minnesotans are unemployed or underemployed.
Currently, when a utility makes a rate hike request in Minnesota, it is allowed to increase rates on an interim basis without a hearing. If the full rate hike is not allowed following a hearing process, the utility is required to refund any interim charges.
Four utilities - Minnesota Power, Xcel, CenterPoint and Minnesota Energy Resources - were allowed to raise rates on an interim bases in 2009 totaling $238,761,000 and on a final basis by $170,220,000. The utilities were then required to refund consumers $68,541,000 in excess rates.
Under the proposed legislation, the utilities would not be allowed to raise rates until the Minnesota Public Utilities Commission, following a full hearing on the merits of the increase, grants the rate hike. The utility would have the burden of proving that its requested rate increase is just and reasonable. This process would generally take 10 months.
Interim rates would only be allowed if the PUC found that an "immediate and compelling necessity" existed that would make it unreasonable to go through the normal regulatory process.
"Consumers should not be saddled with a rate hike before the utility has proven that the rate hike is just and reasonable, nor should consumers be required to front money to a utility," Swanson said.
The second bill would require utilities to file a separate public filing to the PUC itemizing any travel and entertainment costs when seeking recovery during any rate increase request.
PUC, under current Minnesota law, is supposed to only approve rates that are "just and reasonable." In recent years, utilities have sought to recover expenses for travel and entertainment, including retreats, international travel, sporting events, meals and private aircraft, as part of their rate hike requests.
Utilities are not currently required to itemize these expenses separately, leading them to only be uncovered following extensive review of information requests by the attorney general's office.