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PSC wrestles with 'renewable rider' on Otter Tail Power montly bills

Otter Tail Power’s North Dakota residential customers will see an extra charge on their monthly bills next month.

For an average customer, it will be $4.01.

The reason: It was the method approved by the North Dakota Public Service Commission to take into account the Production Tax Credit for the Merricourt Wind Farm, and to even out the charges.

Utilities had been using the credit to give customers a break on their bills up front, meaning there would be a spike when the tax credit expirer, after 10 years. The PSC had been working to smooth things out, to lessen that spike.

The proposal, which will be the “Renewable Resource Cost Recovery Rider,” was approved on a 2 to 1 vote. PSC Chairman Brian Kroshus had suggested a charge of $2.97 per month. But Commissioner Randy Christmann moved to make it $4.01. He said doing that would mean less of a spike later.

"When we get out 15, 20, 24 years, this needs to be at a lower amount," Christmann said. "They're going to be adding new assets, and those will be at the high end. This is a tougher pill to swallow up front, but I do think i's more appropriate in the long term."

Kroshus worried that the $4.01 charge would hit customers at a bad time.

"Otter Tail services towns like Forman, Milnor, Kathryn, Lisbon, Abercrombie," Kroshus said. "Nowhere in the state have been hit harder by the October snowstorm, flooding, late harvest, high propane prices, low commodity prices. That's all having a very distinct negative effect on their main street busineses. And this was before the Coronavirus."

Commissioner Julie Fedorchak sided with Christmann.

"Today's customers pay more for the brand new facility," Fedorchak said. "And at the end of this facility's useful life, it will be a depleted asset that costs less."

Otter Tail paired the Merricourt Wind Farm with a new natural gas peaking plant in South Dakota, to replace the aging Hoot Lake coal plant in Minnesota, which is being shut down.

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