Bismarck, ND-based MDU Resources Group’s Montana-Dakota Utilities operations received approval Monday from the North Dakota Public Service Commission (PSC) for a $4.25 million (3.9%) annual natural gas rate increase. MDU said it was its first rate hike since 2004.

The allocation of the rate increase to the combination utility’s different customer classes is still to be determined by the PSC, which has set a hearing on the matter for Feb. 5, an MDU utility spokesperson told NGI.

The three-member PSC unanimously approved the settlement agreement that makes final an interim rate increase of the same amount that MDU’s utility put into effect last Nov. 1 under the state’s ratemaking process. Originally, MDU had requested a $6.8 million (6.4%) increase in rates in September.

Under the North Dakota process, the PSC has seven months to issue a decision, and in the interim the utility can ask for part of the request to be put in effect while the regulators process the full rate request. In this case, the interim amount allowed to go into effect was subsequently the same amount reached in a settlement among the utility, PSC staff and various stakeholders.

While the overall growth in the state’s economy due mostly to the robust oil/gas production was a factor, the main reason for the rate hike is to recover the cost of MDU’s investment in natural gas facilities, the utility spokesperson said. The utility has invested about $100 million in its gas infrastructure since the last rate hike in 2004. It serves 99,000 natural gas utility customers in the state.

“We have worked and continue to work extremely hard at watching our operating expenses and looking for ways to be more efficient each day, but we also have made significant investments in our gas infrastructure to ensure safe and reliable service as well as investments in technology to provide better service,” said Montana-Dakota CEO Frank Morehouse.

The utility increased rates 2.1% in October 2004.

The MDU Resources Group serves about 245,000 gas utility customers and another 130,000 electric customers in four states — North and South Dakota, Montana, and Wyoming.