Otter Tail Power Company Completes Rate Review
FERGUS FALLS, Minn. — The North Dakota Public Service Commission (PSC) has given the green light for a $13.1 million increase in electric service rates for Otter Tail Power Company, a subsidiary of Otter Tail Corporation (NASDAQ: OTTR). This announcement, approved late last year, marks the company's first significant rate adjustment since 2017.
Understanding the Rate Increase
This average net increase of 6.18 percent comes as overall living costs have risen, yet Otter Tail Power's rates remain competitive, placing them among the lowest in the nation. Otter Tail Power President Tim Rogelstad emphasized the company's dedication to offering reliable and cost-effective electricity to their customers. He also noted that interim rates align closely with the final approved rates, minimizing any major impact on customer bills.
Timeline for Rate Implementation
The process began when Otter Tail Power submitted its original request for a rate review. This request included an interim rate increase set to take effect on January 1, allowing the company to gauge consumer response while waiting for the PSC's final decision. Following the approval, the implementation of the new rates is anticipated approximately 120 days after the PSC's final order, likely in the early part of 2024.
Return on Equity Adjustments
As part of this review, the PSC established Otter Tail Power's return on equity at 10.10 percent, a notable increase from 9.77 percent previously approved. Should the company earn an annual return exceeding 10.20 percent, they intend to return 70 percent of those extra earnings back to their customers. Rogelstad expressed gratitude to the PSC for recognizing the increased costs tied to consistently providing safe and reliable energy.
Customer Focus and Energy Management
Otter Tail Power continues to prioritize its customers by offering tools and resources to help manage energy consumption efficiently. The company is committed to operational excellence, ensuring that cost management remains a priority while maintaining the quality of electricity delivery. The leadership at Otter Tail Power focuses on understanding the evolving needs of their clientele as they navigate this period of change.
About Otter Tail Corporation
Otter Tail Corporation is involved in diversified operations, including electric utility and manufacturing sectors. As a member of the S&P SmallCap 600 Index, Otter Tail is dedicated to enhancing its infrastructure for better service delivery. The corporation's stock is traded on the Nasdaq Global Select Market under the ticker symbol OTTR. More detailed information about the company and its investor relations can be found on their corporate website.
Frequently Asked Questions
What is the purpose of the rate increase?
The rate increase aims to support the operational costs and infrastructure improvements to ensure a reliable electric service for customers.
When will the new rates take effect?
The new rates are expected to be implemented in early 2024, following a 120-day period after the PSC's final order.
How does the increase compare to past rates?
This increase of 6.18 percent is the first significant adjustment since 2017, although rates remain among the lowest nationally.
What is the return on equity established by the PSC?
The PSC has set Otter Tail Power's return on equity at 10.10 percent, which is an increase from previous rates.
How will Otter Tail Power support its customers?
Otter Tail Power is committed to providing options for customers to manage their energy use and engage in operational excellence.