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Commerce Department Recommends 80 Percent Reduction in Minnesota Energy Resources Corporation’s Rate Request

Written testimony and public hearings on MERC’s rate request begin next week

March 04, 2014

For Immediate Release:

SAINT PAUL, MN – The Minnesota Department of Commerce today recommended an $11.4 million reduction to the $14.2 million rate increase proposed by Midwest Energy Resources Company (MERC) for natural gas service in 2014.  Over 214,000 customers in 165 communities across Minnesota receive natural gas service from MERC and would be impacted by the rate increase. After an analysis of the rate request, the Department concluded that the recommended reductions of $11.4 million, or 80 percent of the proposed increase, will still fully allow MERC to provide safe, reliable service.

“The Commerce Department carefully examines requests for rate increases, and here the vast majority of MERC’s proposed rate increase was clearly unjustified,” said Commerce Commissioner Mike Rothman.  “At all times, especially when energy costs are hitting families and businesses during the coldest winter in three decades, it is important that we work to ensure rates are reasonable and justified.”

The Commerce Department recommended reductions after identifying that the filing included overstated costs including the rate of return on equity (capital costs), compensation expenses, and operation expenses.  In addition, the Department concluded that MERC’s revenues will be higher, which diminishes the need to increase rates.

The public will have an opportunity to provide comment on MERC’s proposal over the next few weeks.  After written testimony, public hearings and evidentiary hearings are completed, Administrative Law Judge Eric L. Lipman will present his recommendations to the Minnesota Public Utilities Commission.  The Commission is expected to decide this matter in October 2014.

Three public hearings will be held in March at the following locations:

  • Rochester: Wednesday, March 12 at 12:30 p.m., Rochester City Hall, Room 104, 201 4th Street SE
  • Rosemount: Wednesday, March 12 at 7:00 p.m., Dakota County Technical College, Room 2-104, 1300 145th Street East
  • Cloquet: Thursday, March 13 at 7:00 p.m., Cloquet Chamber of Commerce, 225 Sunny Side Drive

For details and further information, please see the Commission’s website, “Search eDockets” select 13 as the year and type in 617 as the number.

About the Minnesota Department of Commerce Division of Energy Resources

On behalf of the public interest, the Division of Energy Resources is tasked with ensuring that energy service is reliable and reasonably priced while minimizing adverse environmental impacts. Consumers interested in energy efficiency and conservation can visit the Department of Commerce Division of Energy Resources website for consumer energy tips and guides.