Legalectric

Otter Tail Power and Otter Tail Corporation are in the news again, with a bland look at their corporate structure.  This is the same corporate structure which is being reorganized because the utility and non-utility businesses were all lumped together.  Now, according to 6/3/08 filings at SEC and PUC, they’re going to reorganize, and put it into a utility holding company, and separate out the non-utility over aways from the utility.  And because an abusive kind of guy out west is getting all riled up about reporting on Otter Tail’s connection with Bill Gates, I think it’s time to get some more info out there!

Here’s the story in the STrib:

Is Otter Tail a utility or conglomerate?

And a snippet:

There have been no formal allegations against Otter Tail for commingling money between the utility and its other holdings. Still the utility in recent years faced a string of accusations that irregular accounting hurts ratepayers. Whiste-blowers first raised the issue four years ago, which led the Minnesota Public Utilities Commission to call Otter Tail in for its first comprehensive rate and operations review in 20 years.

Otter Tail, which has about 130,000 customers, almost half of them in Minnesota, has denied any improprieties in its bookkeeping, and an administrative law judge last month told the commission that he found no evidence of inaccurate financial reporting. Still, some advocates are nervous about its growing diversification…

Read the ALJ’s Rate Case recommendation here and check out p. 21, Capital Structure, and p. 71 too:

ALJ Rate Case Recommendation

Here’s the punch line regarding corporate structure reflected in the loosey-goosey capital structure (p. 103):

4. OTP has not shown that its proposed capital structure accurately reflects an appropriate division of debt and equity. The department’s proposed capital structure does reflect an appropriate division of debt and equity and should be adopted in calculating required revenue.

So what do y’all think about their structure?  The STrib article notes Minnesota Power’s other businesses, but they’re organized in a holding company structure with some separation of activities, and it seems that concern about this is a legitimate issue, particularly in a rate case.  If you can’t tell what’s a regulated business and what’s not, how could they justify or support a rate increase?