MDU, Otter Tail Power customers to benefit from corporate tax cuts, by refunds and rate reductions

Sep 27, 2018

MDU and Otter Tail customers will see benefits from the lower taxes those utilities are now paying, due to federal tax cuts.

The corporate tax rate was lowered from 35 percent to 21 percent. And the investor-owned utilities are giving some or all of those savings back to customers in terms of one-time bill credits or lower utility rates.

MDU electric customers will see 100 percent of the savings returned to them. The utility had proposed returning 97 percent, and keeping three percent for replacement of underground power lines. But the PSC passed an order returning 100 percent.

Commission chairman Randy Christmann said that was his stated goal when the federal tax cut bill was announced.

"I said then that staff should be doing an investigation of what the impact will be on regulated utilities, and that, the way it sounded, there should be some significant savings, passed on to ratepayers," Christmann said. "For MDU electric, today is the fulfillment of that effort."

In a natural gas case, MDU customers will actually see lower bills – because the final approved $2.5 million annual increase is much less than what was originally proposed, and lower than the approved interim rate increase.

Otter Tail had a pending rate increase. But because of the tax cuts, the final approved increase is less than what Otter Tail had originally proposed, and less than the interim rates granted. That means customers will receive a refund, and will see lower rates – and the fixed basic service charge for an Otter Tail electric customer will be no more than $14 a month.