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Hibbing Public Utilities Commission approves 2025 rate adjustments after public input
Summary
The Hibbing Public Utilities Commission approved Baker Tilly’s option 1 rate recommendations for 2025 — including a 5.4% electric increase and an 11.25% water increase — after staff presentations, public outreach and a roll-call vote.
Hibbing Public Utilities Commissioners on May 27 approved a package of 2025 rate adjustments and the 2025 operating budget based on an outside rate study by Baker Tilly.
The commission voted to adopt Baker Tilly’s option 1 recommendation, which the utility presented as a phased approach to bring rates toward long-term financial stability. The study recommends a 5.4% increase for electric rates, a 4.5% decrease in gas rates, a 3.5% increase for steam and an 11.25% increase for water revenues.
The vote followed presentations by Hibbing Public Utilities staff and Russ Hissom of Baker Tilly, public outreach including a town-hall meeting and discussion among commissioners about how best to balance financial sustainability with customer impacts. Mr. Peterson, Hibbing Public Utilities’ general manager, said the recommendation reflects the consultant’s “bare bones, unbiased, outside opinion” on how to set rates for the coming year.
Commissioners and staff emphasized that the rate study is a multi-year projection and that each year’s changes will be considered separately. Hissom told the commission the study held the base price of natural gas constant in its modeling; the utility’s monthly purchase gas adjustment, or PGA, would still be used to pass commodity price changes through to customers if actual gas costs rise.
Commission discussion touched on customer impacts. Staff provided an example of average residential bill impacts under option 1: for an average usage of 638 kilowatt-hours, the projected electric bill would increase from about $102 to about $107; average water monthly bills were shown rising by roughly $4 under the plan. Commissioners asked about protections for business customers with low load factors; staff described a recommended simplification of small-power demand charges intended to reduce abrupt spikes for some commercial customers.
Commissioner James Bayless moved to adopt Baker Tilly’s option 1. The motion was seconded by Commissioner Julie Sandstedt and approved by roll call with Commissioners Bayless, Babbage, Hart, Sandstedt and Stokes voting in favor.
Staff said some elements of the rate and rate-design changes could take effect July 1, 2025, if approved, and that the commission intends to review rate adjustments annually rather than approving multiyear increases in a single vote. Mr. Peterson said the utility will continue public communication and planned to return with the 2026 budget in November for action.
Why it matters: The commission has moved from years of operating losses to a position where it must set rates to sustain operations, maintain reliability investments and satisfy financing covenants tied to PFA debt arrangements. The adopted changes are intended to reduce ongoing operating deficits while limiting “rate shock” for customers.
What’s next: Staff will finalize the 2025 budget paperwork, implement the approved rate design adjustments, and continue outreach to explain bill impacts to residential and commercial customers.
