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FERGUS FALLS, Minn. - Otter Tail Power Company, under Otter Tail Corporation (NASDAQ:OTTR), has filed for an electric rate increase with the South Dakota Public Utilities Commission (PUC). The subsidiary cites the need to cover rising operational costs and to maintain reliable service amidst growing electricity demand. The proposed rate hike, if approved, would mean an average increase of 12.5% for customers. The $3.2 billion market cap utility company maintains strong financials with a healthy current ratio of 2.62 and trades at an attractive P/E of 10.86, according to InvestingPro data.
President Tim Rogelstad stated the company’s commitment to delivering cost-effective energy and managing the rate increases through strategic investments and efficient operations. Otter Tail Power, which last underwent a rate review in South Dakota in 2018, is known for being one of the lower-cost providers in the nation. The company has demonstrated financial stability by maintaining dividend payments for 55 consecutive years, with a current dividend yield of 2.71%.
The request, if sanctioned by the PUC, would result in a $5.7 million rise in rates. The rate case process involves a thorough review by the PUC to ensure transparency and fairness in the rate-setting mechanism. The company may implement interim rate increases on December 1, 2025, if the PUC does not reach a decision within 180 days. Any differences between interim and final rates would be refunded or absorbed by Otter Tail Power, depending on whether the interim rates are higher or lower, respectively.
Otter Tail Power has made information available on its website regarding the potential impacts on monthly bills and further details about the rate case proceedings. This move is part of the company’s broader strategy to meet customer needs while adapting to market conditions and regulatory environments.
The information for this article is based on a press release statement from Otter Tail Corporation.
In other recent news, Otter Tail Corporation reported its first-quarter 2025 earnings, showing a mixed financial performance. The company exceeded earnings per share (EPS) expectations with a reported $1.62, surpassing the forecasted $1.54. However, revenue fell short, coming in at $337.35 million against a projection of $349.7 million. Despite the EPS beat, the revenue miss raised concerns among investors. Otter Tail maintains a strong liquidity position with over $600 million available, and its Plastics segment saw a 13% increase in sales volumes despite declining PVC pipe prices.
Additionally, the company is advancing several strategic projects, such as wind repowering and solar initiatives, expected to enhance its energy portfolio. Otter Tail’s management reaffirmed their 2025 EPS guidance, anticipating long-term earnings growth between 6-8%. The company’s strategic focus on diversified business operations, particularly in its Plastics segment, helped mitigate softness in some end markets. While Otter Tail’s stock saw a decline following the earnings release, the company remains focused on its long-term growth prospects, driven by ongoing investments in infrastructure and renewable energy projects.
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