BISMARCK, N.D. (NewsDakota.com/KFGO/North Dakota Monitor) – Two natural gas utility providers in North Dakota are proposing residential rate increases between 7.5% and 12.5%, following public input sessions with the state’s Public Service Commission in July.
The proposed increases would impact residents receiving natural gas from Northern States Power Company (part of Xcel Energy) and Montana-Dakota Utilities (MDU).
Xcel Energy’s proposed rate increase aims to generate an estimated $8.5 million in revenue, resulting in an average monthly increase of $6.75 per residential customer. MDU’s proposed rate hike would raise approximately $11.6 million in revenue, increasing monthly gas bills by about $5.90 for residential customers.
Both companies filed their proposed rate increases with the commission in December and engaged in public input sessions to address questions about the hikes.
Alex Nisbet, regulatory policy specialist for Xcel Energy, informed the commission on Monday that the increase is necessary to cover costs associated with meter replacements, infrastructure upgrades, relocation due to Fargo-Moorhead’s flood diversion project, and new high-pressure distribution projects in Grand Forks and West Fargo.
“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 explained.
He added that Xcel plans to introduce a distribution charge based on residential gas usage, in addition to its existing flat delivery charge. This would lead to an average increase of $2.75 from the delivery fee and $4 from the new distribution charge per month.
“Between those two new increases, that’s what would get us to our proposed rate increase,” Nisbet said.
MDU’s rate increase is attributed to pipeline replacement projects and higher operating and maintenance costs, according to the company’s website.
The North Dakota chapter of AARP has filed comments to intervene on behalf of Red River Valley residents, opposing the Xcel increase. The organization argued that utility rate hikes can be particularly harmful to 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. “Xcel Energy’s proposed 12.5% increase is well above the national average, and we encourage the NDPSC to reject this unreasonable increase.”
The AARP also praised North Dakotans who submitted comments to the PSC in 2022, which they claim helped reduce Xcel Energy’s previous natural gas rate increase request by about $2 million.
Commissioner Randy Christmann, chair of the PSC, expressed surprise at the short interval between rate increase requests.
“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, Xcel’s last request to adjust natural gas rates was in 2007. Xcel serves about 63,000 customers in the region from Grand Forks to Fargo to Oriska, with approximately 1,150 miles of distribution pipelines. MDU serves 115,000 natural gas customers across 76 North Dakota communities.
AARP also intervened in the MDU rate case, arguing that residential customers would face larger increases compared to some larger customers.
Public comments on the proposed rate increases can be submitted to the Public Service Commission via email at NDPSC@nd.gov or by calling 701-328-2400. Comments on the Xcel increase are due before a public hearing on Sept. 3, while comments on the MDU increase are due before its hearing on Sept. 30.
If approved, the new rates could be implemented by the end of 2024.
The PSC has already approved interim gas rate increases, raising Xcel Energy’s revenue by $7.9 million effective March 1 and MDU’s by $10.1 million effective Jan. 1. Customers will receive refunds if the final approved rates are lower than these interim rates.