Utility board approves reduced rate hike
Customers of Alliant Energy will see a modest decline in their electric rates this spring from what they’ve been for the past nine months. The Iowa Utility Board denied Alliant Energy’s request for a roughly 14 percent increase in rates. Instead, Alliant will be allowed an increase of just under 10 percent from 2009 levels, which is lower than the interim rate increase which had been in effect since March, when the company raised its rates 10 percent. Alliant supplies electricity to roughly 10,000 customers in Washington County.
The net effect of the board’s decision is that Alliant’s customers in Iowa will be refunded $4.5 million. Scott Drzycimski, team leader of strategic communications at Alliant/Interstate Power and Light Company, said the refund will be paid as a lump sum and will likely occur in the first quarter of 2011. He said it is too early to say how much money the average rate-payer will get back because the board has yet to decide how the refund will be divided among the several hundred thousand Alliant customers in the state.
Drzycimski said the board talked about the possibility of giving all of the refund to residential customers and none of it to industrial customers. The specifics of the refund will be known next month when the board presents its formal written order.
“We don’t know how it’s going to work out,” said Drzycimski. “Will everyone get an equal amount? Will the refund be based on usage? Will it be based on customer class? We won’t know until the written order comes out.”
Alliant originally requested a 14 percent raise ($163 million), but lowered that to 13 percent ($149 million) during an evidentiary hearing in September. That was when Alliant presented arguments to the board for why it should approve the rate increase. Alliant’s upper management testified on the company’s behalf, as well as other witnesses such as an economist.
During the hearing, Alliant learned that it would be able to refinance some of its debt in Iowa and Minnesota at a significant savings, and reduced the amount of its request accordingly.
In March, the company implemented a temporary rate increase of $119 million, or 10 percent. On Wednesday, the board announced that it would allow only a $114.5 increase, meaning that $4.5 million, plus interest, would be refunded to customers.
Drzycimski said that Alliant’s customers could see even lower rates in the future if the company’s cost management plan is approved by the board and passes its IRS audit. The company has sold a number of assets and is expected to receive a large amount of money in tax benefits. The money customers could receive from the cost management plan would dwarf their refund check.
“We’re estimating the cost management plan will produce $250 million in savings,” said Drzycimski, who remarked that the money will go directly to consumers.
Drzycimski said the payments to customers from the cost management plan would occur over several months and not in a lump sum as the refund.
For more, see our Dec. 17 print edition.