Minnesota Power proposed a rate hike for residential utility customers Friday as part of a plan to cut energy costs for large mining and paper companies.

The plan, filed with the state Public Utilities Commission by Duluth-based Minnesota Power, proposes a 14.5 rate increase for a typical residential customer.

The residential increase would offset a proposed 5 percent rate reduction for a dozen large mining and paper companies in northeast Minnesota.

A state law passed earlier this year allows companies struggling with global competition to apply for a break in their electricity rates.

But state Rep. Tom Anzelc (DFL-Balsam Twp.), who introduced the legislation, said he's having second thoughts.

"The proposal from the power company is ill-timed and much, much, much too large," he said.

The PUC is expected to decide on the matter early next year.

Three of the facilities the new rate plan would benefit remain closed because of low iron ore prices and stiff competition in the steel industry: U.S. Steel's Keewatin Taconite, Cliffs Natural Resources' United Taconite, and Mesabi Nugget.

Minnesota Power's Pat Mullen conceded the rate reductions for those mining companies, as well as paper mills, wouldn't solve all their economic woes. "But everyone's doing their part," he said.

Minnesota's iron mining sector has seen more than 1,000 layoffs over the past year. The region's paper mills have also shed hundreds of jobs in recent years.

Minnesota Power is heavily reliant on those large customers. Iron ore mines and taconite plants consume 40 percent of the power the utility generates. Paper mills buy nearly 20 percent, in addition.

Mullen said those large customers have paid more than their fair share of energy costs in recent years, and have subsidized residential ratepayers.

The residential utility bill hike would not affect low-income ratepayers.