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North Dakota regulators mull natural gas rate hike to help utility recoup infrastructure costs

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BISMARCK, North Dakota — Montana-Dakota Utilities Co. wants a $2.6 million increase in its natural gas rates to help cover the cost of its increased investment in natural gas facilities in North Dakota.

The Bismarck-based utility, which serves more than 107,000 North Dakota customers in 74 communities, is asking the state Public Service Commission to grant the increase that would raise residential natural gas bills about 2 percent. Home customers would pay about $24 more annually, though large industrial natural gas users would not see an increase, the company said.

The commission began a two-day public hearing on the proposed hike on Monday at the state Capitol. Commission Chairwoman Julie Fedorchak told reporters that she expects a decision on the rate hike in about a month.

MDU originally sought a 3.4 percent overall rate increase, which would have raised $4.3 million annually, or about $3.50 a month for an average residential customer. The utility reached a settlement with interveners in the case, including AARP North Dakota.

John Coffman, a St. Louis, Missouri-based lawyer for AARP, said the group approves of the 2 percent rate hike but that it should be spread among all rate payers.

"The proposal is a little bit heavy on the residential customer class," he said. "We are concerned about the smallest users that scrimp and save and do the best they can to keep their bills affordable."

Nicole Kivisto, MDU's president and CEO, told the three-member regulatory panel that the company conducted a study that found residential customers are subsidized by larger ratepayers.

Home customers are "not meeting the rate of return," she said.

About 85 percent of MDU's customers are residential, the company said.

North Dakota, the nation's No. 2 oil producer behind Texas, produces about 1.2 million barrels daily. The state also produces a record 1.6 million cubic feet of natural gas daily that comes when an oil well is drilled.

MDU projects its natural gas investment in the state will be $212 million by year end, a 15 percent increase from 2014.

The utility is a subsidiary of MDU Resources Group Inc. of Bismarck, whose holdings include natural gas pipelines, electric and gas utilities, and production of oil, gas and construction materials.

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