Hibbing utilities panel fails to advance proposed rate changes after divided debate

Hibbing Public Utilities Commission members on June 9 debated whether to implement the second phase of a five-year rate study by Baker Tilly and whether to reinstate a purchase-gas adjustment to recover a $1.3 million shortfall.

Mr. Peterson, presenting the study’s second-year recommendations, said staff preferred to adopt Baker Tilly’s proposed increases for electric, steam and water but not to follow the consultant’s recommendation to lower gas rates. He told commissioners the phased approach balances “financial stability and phasing in rate changes over time” while addressing aging infrastructure and depreciation needs.

The staff presentation included bill examples: the average Hibbing electric household (638 kilowatt-hours) would see about a $5.81 monthly increase; a small commercial (10,000 kWh) example could rise about $100 per month; average residential water was estimated at roughly a $5.14 monthly increase. Mr. Peterson said the proposed combined adjustments (if adopted as recommended) would generate roughly $1 million in additional electric revenue and smaller amounts for steam and water.

Commissioner Hart questioned whether the proposed purchase-gas adjustment (PGA) was reasonable after staff said last year’s combined rate actions resulted in an effective 18% net gas-rate reduction and a $1.3 million undercollection. He emphasized customer impacts: “I wouldn’t be in favor of giving our gas customers a 15 and a half% increase this winter. Doesn’t make sense. Doesn’t seem reasonable. And frankly, it’s discriminatory,” Hart said.

Staff said the PGA’s purpose is to true up variances between budgeted and actual commodity costs and that reinstating an 18-cent-per-CCF PGA would address the current undercollection; staff added that transmission and market volatility have also affected costs.

After discussion, Commissioner Sandstead moved to approve the rate adjustments while leaving the gas rate unchanged (management’s recommendation versus Baker Tilly’s gas decrease). The motion did not receive sufficient support and failed without a roll-call tally, leaving the commission without a formal decision on the second-phase package or the PGA.

What happens next: commissioners did not adopt the staff recommendation or the Baker Tilly gas decrease, so rates and a PGA remain unresolved pending further action at a future meeting or via additional staff recommendations. The commission will revisit rates as part of upcoming budget work this fall and during the ongoing utility planning process.

Ending: The commission moved on to other items after the vote failed; no implementation timeline for new rates or PGA was set at the June 9 meeting.