Otter Tail Power Company customers will see an added charge to their monthly bills.
It’s called a “generation cost recovery charge.” For an average Otter Tail residential customer, using 1000 kilowatts of power, it will be an added $1.96.
The Public Service Commission approved the charge. Commission chairman Brian Kroshus said the charge is due to the retirement of two units of the Hoot Lake coal-fired plant in Fergus Falls, Minnesota, being replaced with power from the Merricourt Wind Farm in North Dakota and a new natural gas peaking plant to be built near Aurora, South Dakota.
Kroshus said it's an example of the challenge faced by coal fired plants that have to ship coal some distance.
"The coal that was being used at Hoot Lake was being shipped from the Powder River Basin in Montana and Wyoming," Kroshus said. "That additional shipping cost, as rail rates have increased, puts those types of facilities at risk, and imposes greater challenges to them."
Kroshus said the economics don't work, in comparison to replacing it with different generation.
Kroshus said for now, the charge will be a separate line item on the monthly bill – but once Otter Tail files a new rate case, it will become part of the general rate structure.