Rate review is a regulatory check where an insurer, utility, or other regulated service provider submits proposed price or premium increases to a government agency for examination and possible approval or modification. It matters to investors because the outcome determines how much revenue the company can charge customers, affecting earnings, profit margins and demand; think of it like a landlord asking the city for permission to raise rents, with regulators able to limit or reshape the increase.
settlement agreementregulatory
A settlement agreement is a legally binding deal where two sides resolve a dispute—often a lawsuit—by agreeing on terms such as payments, actions, or changes in behavior instead of continuing the case to trial. For investors it matters because settlements can create immediate costs, limit future liabilities or risks, and change a company's cash flow, reputation, or ongoing obligations much like paying a negotiated bill to avoid a lengthy, uncertain fight.
rate proceedingregulatory
A rate proceeding is a formal review by a government regulator in which a utility or regulated service provider asks permission to change the prices charged to customers; the regulator examines costs, service quality and public interest before approving, denying or modifying the request. For investors, the outcome affects a company’s revenue, cash flow and allowed return on capital—much like a landlord asking a housing board to raise rents, the decision can materially change future earnings and investment risk.
return on equityfinancial
Return on equity shows how effectively a company uses its shareholders' money to generate profit. It is calculated by dividing the company's net profit by its shareholders' equity, indicating how much profit is earned for each dollar invested by owners. Higher return on equity suggests the company is good at turning investments into earnings, which can be an important factor for investors assessing its profitability and efficiency.
capital structurefinancial
Capital structure is the way a company finances its operations and growth by using different sources of money, such as borrowed funds (loans or bonds) and owner’s equity (investments from owners or shareholders). It’s like a recipe for baking a cake, where the balance of ingredients affects the final product's strength and taste; similarly, the mix of debt and equity influences a company's stability and risk. For investors, understanding a company's capital structure helps gauge how risky it might be to invest or lend money.
Rate base is the dollar value of the physical assets and capital a regulated utility uses to deliver its service — things like power plants, pipes, or equipment. Regulators use that value as the starting point to set prices the utility can charge by allowing a specific percentage return on that base, so a larger or higher-valued rate base usually means higher permitted revenues and therefore directly affects investor earnings and the company's ability to raise capital.
Public Utilities Commissionregulatory
A public utilities commission is a government agency that oversees and regulates essential services such as electricity, water, and natural gas to ensure they are provided safely, reliably, and at fair prices. For investors, it matters because these agencies influence the profitability and stability of utility companies, which are often seen as steady, reliable investments due to their regulated nature.
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FERGUS FALLS, Minn.--(BUSINESS WIRE)--
Otter Tail Power Company, a wholly owned subsidiary of Otter Tail Corporation (Nasdaq: OTTR), today announced the South Dakota Public Utilities Commission approval of the settlement agreement reached between Otter Tail Power and commission staff, concluding the rate proceeding.
Investor highlights:
Net revenue increase of $3.3 million
Achieved 58% of original request; 75% after considering adjustments for rider treatment
Blackbox settlement regarding return on equity and capital structure
Return on rate base of 7.09%
Moratorium on increases to base rates until December 1, 2029, with certain exceptions
“Today’s outcome reflects a constructive regulatory process, and is expected to support safe, reliable and economical electric service for our South Dakota customers,” said Otter Tail Power President Tim Rogelstad. “We appreciate the collaboration with the South Dakota Commission and staff throughout the proceeding.”
Final rates are anticipated to be implemented on April 1, 2026. Even with the increase, Otter Tail Power is expected to continue having some of the lowest electric rates in the region and country.
Forward Looking Statements
This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “expect,” “will” and other similar words and expressions. Such statements are based on the current beliefs and expectations of management. Forward-looking statements made herein, which may include statements regarding the approved net revenue increase, the authorized return on rate base, our ongoing capital investment plans, the anticipated financial and operational impact of the South Dakota rate review and the implementation of final rates as well as other assumptions and statements, involve known and unknown risks and uncertainties that may cause our actual plans or results to differ from our assumptions or expectations.
Our risks are more fully described in our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K, as updated in subsequently filed Quarterly Reports on Form 10-Q, as applicable. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information.
About the Corporation
Otter Tail Corporation, a member of the S&P SmallCap 600 Index, has interests in diversified operations that include an electric utility and manufacturing businesses. Otter Tail Corporation stock trades on the Nasdaq Global Select Market under the symbol OTTR. The latest investor and corporate information is available at www.ottertail.com. Corporate offices are in Fergus Falls, Minnesota and Fargo, North Dakota.
Investor contact: Beth Eiken, Manager of Investor Relations, (701) 451-3571
Media Contact: Stephanie Hoff, Director of Corporate Communications, (218) 739-8535
