BISMARCK, North Dakota — Montana-Dakota Utilities Co.'s residential customers in North Dakota will see their monthly gas bills rise by about $2 under a rate increase approved Wednesday by the state Public Service Commission.
The Bismarck-based utility, which serves more than 107,000 North Dakota customers in 74 communities, contends the 2 percent rate hike is necessary to help recoup the costs of its increased investment in natural gas facilities in the state.
The utility estimates the increase will raise $2.6 million a year more than current rates. Home customers would pay about $24 more annually under the new rate structure, though commercial and large industrial natural gas users will not see an increase. Some large natural gas users will realize a decrease in rates, including the Minot Air Force Base, which will see a 1.6 percent rate reduction, a savings of about $40,000 annually.
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, which agreed to the 2 percent rate hike but wanted the increase spread among all ratepayers.
MDU has told the three-member, all-Republican regulatory panel that the company conducted a study that found residential customers are subsidized by industrial and commercial users.
Non-residential ratepayers already are "paying more than their fair share," Commissioner Brian Kalk said.
About 85 percent of MDU's customers are residential, the company said.
MDU requested the higher rates in February. Under North Dakota law, utilities that request higher gas rates are entitled to begin collecting temporary increases within two months of their initial rate filing. Since March, the utility has been collecting $2.40 monthly from home customers. Because the initial, temporary increase was found to be too generous, the utility must refund customer overpayments. That will amount to about $7 for an average residential customer, who should see the credit on their February bills.
The rate increase approved Wednesday brings to three the number of successful natural gas rate increases MDU has obtained in a little more than a decade, records show. The company was allowed to bump rates by 2 percent in 2004 and 4 percent last year.
North Dakota, the nation's No. 2 oil producer behind Texas, produces about 1.1 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. Several companies have invested more than $11 billion to capture and use natural gas in the past eight years, industry officials say.
MDU said its natural gas investment in the state will be $212 million by year's end, a 15 percent increase from 2014.
MDU spokesman Mark Hanson said natural gas demand in North Dakota is being driven about equally by residential and commercial users.
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.