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PUC's Nelson: Federal policies will raise electric, phone bills

Public Utilities Commission member Chris Nelson said Tuesday during a presentation to the Mitchell Lions Club at The Depot that phone and electric bills will increase soon and federal policies are behind the hikes. (Tom Lawrence/Republic)

Federal regulations will have an impact on utility bills and bank accounts, according to Public Utilities Commission member Chris Nelson.

Nelson, speaking Tuesday to the Mitchell Lions Club at The Depot, said telephone and electric bills will go up in the next few years. New federal policies are at the root of the price increases, he said.

New, stricter regulations on coal-fired plants that produce electricity will close one of two such plants in South Dakota, according to Nelson.

The plant in Rapid City, owned by Black Hills Power, will be replaced by a natural gas-powered turbine, he said.

President Barack Obama wants to bankrupt coal-fired plants, Nelson said, and that is behind the tougher rules that will lead to the closure of the Rapid City plant and other plants across the country.

"I think there's a political attitude, on the part of some in Washington, to do away with coal-fired (plants)," he said.

A second plant, the Big Stone Power Plant near Milbank, will be retrofitted and remain open at a cost of $490 million, Nelson said. It is owned and operated by the Otter Tail Power Company.

But he said the increased costs for upgrades or replacing power plants will be passed on to the consumers. Because the coal-fired plants must be closed or altered within a few years, that will increase costs, Nelson said, and the customers will pay for it.

South Dakota is especially vulnerable to that, since it receives 70 percent of its electricity from coal-fired plants in South Dakota, North Dakota and Wyoming, he said.

"We are heavily reliant upon coalfired," Nelson said.

Electric companies are also planning rate hikes, he said.

Xcel Energy is requesting a 12 percent rate increase now, Nelson said, and rural cooperatives will raise their rates by an average of 6 to 9 percent.

NorthWestern Energy has not announced any increases yet, he said, but there are "rumblings."

Telecommunications has changed dramatically in 30 years, he said, and "there's not a lot of good news" on rates in that area, either.

A new, 759-page report from the Federal Communications Commission has pointed to a new world that will include increased rates, Nelson said.

A universal service fund, averaging around $1 or less from monthly phone bills, is being phased out, he said.

That fund was created to assist in telephone service development and improvements, especially in rural areas or places difficult to serve. For every $1 paid out by South Dakotans, $5 was returned to the state, and it made up 24 percent of the budget for small telephone companies, Nelson said.

"That is a tremendous concern for rural phone companies," he said.

Long-distance carrier fees paid to local companies are also being dropped, the commissioner said, and that will be a $1 billion loss to local firms.

The FCC predicts this will lower long-distance rates, but Nelson said he doesn't believe that. "You're not buying that?" he asked the audience of about 24 people. "Neither am I."

The local companies are being advised to raise their rates to make up for the lost fees, he said, meaning customers will pay for the change. After the speech and a question-and-answer session, Nelson, a Republican, said he wasn't speaking as a partisan. "Those are the facts, plain and simple," he said. "Just the facts." Nelson, 47, is in his first term as a PUC member. The White Lake native served eight years as South Dakota's secretary of state after working in the office for 15 years. Term limits kept him from seeking a third term, so he sought the 2010 Republican nomination for Congress.

Nelson lost a three-way race to Kristi Noem and said he was prepared to resume a career in ranching when Gov. Dennis Daugaard surprised him by naming him to the PUC.

Daugaard selected PUC member Dusty Johnson, of Mitchell, as his chief of staff and named Nelson to fill the post.

Tuesday, Nelson said he "loves" the intellectual challenge the new position offered him.

Because he was appointed to the seat, if he wants to stay in office he must run in the next state general election for the remaining four years of the six-year term. Nelson did not mention his campaign in the speech.

No Democratic candidate has been named, but he said he is sure one will appear.

Another recently appointed PUC member, Kristie Fiegen, will also be on the ballot this fall.

Fiegen, a Republican, was appointed by Daugaard to fill out the final year and a half of the term of Steve Kolbeck, a Democrat who resigned in 2011.

Fiegen's announced opponent is Matt McGovern, a Sioux Falls lawyer and the grandson of former Sen. George McGovern.