AARP is signing off on a settlement in the MDU rate case, one that will see residential customers paying about $1 million less than they would have paid under a previous settlement agreement between MDU and the Public Service Commission’s advocacy staff.

AARP had objected to the previous settlement agreement, arguing that the increase to the residential class of customers was too steep, and would be a hardship for income families, and others who have lost jobs during the pandemic.

Montana Dakota Utilities meanwhile, had requested a rate increase of $8.973 million last year in August, a 7.8 percent increase over current rates. Concurrent with that, they had also requested an interim rate increase of $6.893 million, which the Public Service Commission approved last year, effective Jan. 1.

The terms of the new settlement agreement are nearly identical to the old terms, but the allocation of costs to residential customers is $4.9 million, which is almost $1 million less than the previous $5.84 million.

The rate increases percentages by customer class would be as follows under the new settlement agreement:

• 8.4 percent to residential

• 3.7 percent to firm general service

• 2.7 percent to Air Force delivery

• 2.9 percent to small interruptible

• .9 percent to large interruptible

The residential rate increase will still be aded to the fixed fee portion of the bill, which AARP has argued against, because of how it erodes the ability of fixed-income families to control their utility costs by turning down the temperature dial.

“In any agreement there are things that you don’t love,” AARP North Dakota’s State Director Josh Askvig said. “But overall, I think a million dollars saved is a million dollars saved, so we’re happy that we were able to stand up and ensure that we save that money for customers, assuming the PSC approves it.”

Askvig said he hopes the company and other stakeholders will consider the effect of increasing the flat fee on fixed-income and low-income families going forward with future rate adjustments.

“We’ll certainly do our due diligence to see if and where and when we need to weigh in,” Askvig said.

The overall rate increase under the new settlement agreement will still be restricted to $6.886 million — very close to the interim rate — for an average overall rate increase of 6 percent.

The difference between the interim rate and the settlement rate is also still around $7,000. Just $2,500 of that has been collected, which per customer, is a 2-cent refund. Since the costs of returning that exceed the value of the refund, MDU will still get to keep it under the terms of the agreement.

The agreement also allows the utility a return on equity of up to 9.3 percent, which works out to an overall rate of return of 6.851 percent.

The settlement will be effective upon approval by the Public Service Commission, which meets Wednesday to consider the new deal.

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