Aug. 6--Duluth-based Minnesota Power announced Wednesday that it will seek permission to increase electrical rates again.

It will be the second such request in two years. The utility got permission to raise its rates once already this year, though not by as much as it wanted. Now the company says it's going to ask for more.

"We recognize a price increase is not welcome news to our customers, but it is necessary to meet the rising costs of producing and delivering energy," Allete CEO Don Shippar said in a statement issued Wednesday morning.

He said the utility has invested nearly $1 billion in its system over the past three years to provide the "safe and reliable service our customers expect" while investing in new sources of clean energy mandated by the state.

Still, the increases don't sit well with some customers.

"It doesn't personally bother me so much," said Leslie Lawrey, a Minnesota Power customer from Hermantown. "But I think of all the people who have fixed or low incomes. It's much harder for them to meet their obligations and responsibilities when costs keep going up. A lot of times, I think that those at the top are only looking at the bottom dollar, and they're not really thinking of those people."

Minnesota Power filed papers with the Minnesota Public Utilities Commission in May 2008 seeking authority to increase its base rates for the first time in 14 years. In the end it received permission to increase rates by only about half of the $40 million per year it had requested. Those rate increases are expected to take effect this fall, increasing the average monthly residential bill by about $2.

So far, the company has offered no details on the scale of the next increase it will seek.

"Those numbers have not been finalized," said Amy Rutledge, Minnesota Power's communications manager.

She described Wednesday's notice as an advance notice, saying: "It's our intention to be as transparent as possible with customers, the MPUC and investors."

Any additional rate increases probably would come into play next year.

The company says that while recent projects have increased operation and maintenance costs, it has reduced costs in other areas. Shippar said in his statement that recent cuts include staff reductions and pay freezes for executives and management, as well as aggressive cuts to discretionary spending.

Some of Minnesota Power's spending has been mandated by the state, which has required utilities to generate 25 percent of their electricity from renewable sources by 2025.

"I don't think anyone thinks renewable energy is cheap or free," said Pat Mullen, Minnesota Power's vice president of marketing and public affairs.

Laila Scott, a Minnesota Power customer from Duluth, said she's willing to pay more for cleaner energy, especially if it results in a better world for her 6-year-old son, James.

"I say invest the money and do it right," she said. "So what if it raises our rates a little bit, if it changes our way of thinking about energy."

-----

To see more of the Duluth News Tribune, or to subscribe to the newspaper, go to http://www.duluthnewstribune.com/.

Copyright (c) 2009, Duluth News Tribune, Minn.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NYSE:ALE,

A service of YellowBrix, Inc.