Dear Steam Customer:

As you may be aware, Hibbing Public Utilities (HPU) is no longer generating electricity for Xcel Energy at its power plant. HPU is also not able to leverage its electrical assets to offset steam production costs due to a long-term electrical contract with Minnesota Power (MP) through 2024 and the current electrical generation market sale amount is much less than our cost of electrical production. As a result, a greater share of the costs of operating the power plant are now charged to the steam utility. At todays’ steam rates, the steam costs are more than the steam revenues. We have completed, and are in the process of doing, many things to reduce steam production costs. We have also started and completed projects on the steam distribution system.

Despite these efforts, it does not appear that cost reductions by themselves will result in the steam utility breaking even. Thus, the only way to decrease the steam utility’s deficit could be with future steam rate increases. However, the Commission is not obligated to review each utility component on its own; it can also make a decision for one or more of the other utilities to help pay for the cost of operating the steam utility.

We are reaching out to our customers to find out how these changes are likely to affect their choices about how they heat their homes in the future. This short survey is intended to provide HPU with feedback from its customers as it makes plans for how best to provide utility services in the years to come.

Please complete the survey by April 17th which will go directly our survey partners at Baker Tilly.

Thank you very much for taking the time to complete this survey. Your feedback will be very valuable as HPU plans for the years ahead. If you have any additional thoughts you would like to share, please include them in this survey or contact HPU directly. Responses will remain anonymous, though you may choose to identify yourself if you wish.