Tentative settlement trims Otter Tail Power's 12.5% rate request in South Dakota

KELO’s Capitol News Bureau reported March 3 that a tentative settlement in the South Dakota review would allow Otter Tail Power Company, headquartered in Fergus Falls, to raise electric rates for its South Dakota customers by 7.09%, down from the 12.5% the company initially requested.

The company’s broader filings include a Minnesota request for interim increases. In a Fergus Falls press release, Otter Tail asked the Minnesota Public Utilities Commission for permission to implement an interim overall bill increase of approximately 12.6% beginning January 1, 2026, while the PUC conducts an 18- to 24-month review. Otter Tail’s filing estimated that during that interim period a typical residential customer’s bill would increase approximately $13.15 a month and a typical business customer’s bill would increase approximately $43.67 a month, noting that each customer’s interim increase will vary by rate class and usage.

South Dakota regulatory records and reporting by the South Dakota Searchlight show the company applied for the increase on June 4, year not specified in the available snippet, and that regulators delayed putting the increase into effect for six months to allow staff time to assess the request, a move Searchlight described as a typical commission procedure. Searchlight also reported the proposal would generate an additional $5.7 million in annual revenue and that Otter Tail delivers electricity to about 11,500 customers in northeastern South Dakota. The commission voted to charge Otter Tail up to $500,000 for costs associated with reviewing the request.

Otter Tail framed the request as necessary to cover rising operational costs and infrastructure investments. In a letter to the commission cited by Searchlight, the company wrote, "This increase is needed for the company to continue providing high-quality, reliable, and safe electric service." Company materials list projects tied to recent adjustments, including the purchase of a natural gas plant in Deuel County, construction of a wind farm in North Dakota, and turbine blade replacement and upgrades for multiple wind farms. A press release quote attributed to Rogelstad said, "According to Rogelstad, even with this increase Otter Tail Power customers will keep paying less for the energy they need to power their homes and businesses than they would almost anywhere else in the region." Rogelstad added, "While this is an impressive statement, we aren’t competing against our neighbor’s rates. We’re competing against our own," and "Our ability to keep our rates among the lowest in the region demonstrates our tradition of working hard for the economic viability of our customers and communities, and we’ll keep that tradition going."

The record contains explicit discrepancies that remain unexplained in the sources: Searchlight and Joshua Haiar reported the proposed increase as 12.5% and estimated a typical residential impact of $14.39 a month, or $172.68 a year, while Otter Tail’s Minnesota-focused press materials refer to an approximate 12.6% interim increase and a $13.15 monthly residential estimate. KELO’s March 3 notice treats the 7.09% figure as a tentative settlement for South Dakota; Otter Tail anticipates a final PUC decision in the first quarter of 2027, with any approved final rates likely to take effect in the second or third quarter of 2027.