BY CHUCK VANDENBERG
FORT MADISON – Lee County residents could be seeing a 10-12 percent increase in their Alliant Energy bill in the next two years and a six to eight percent increase in the next month.
According to Joel Schmidt, vice president of regulatory affairs, Alliant will be applying to the Iowa Utilities Board for a rate increase on April 3. The energy company has not submitted a request for a rate increase since 201o.
The rate increase will be in the range of 10 to 12% in base utility rates for customers and would eventually result in a $12 to $14 monthly increase on an average $100 monthly bill. The utility will ask for an interim increase while the request works it way through the public hearing process.
Schmidt said the interim rate increase would be about two-thirds of the final rate increase and the interim would go into effect about 10 days following the application with the board. If approved, the rate increase w0uld be phased in over a two year period and Schmidt said Alliant is hoping to utilize some credits to help reduce the amount of the rate increase.
“We would think public hearings would be in May or June and hopefully we would have a final decision from the IUB in October,” Schmidt said.
He said if the IUB determines that the request is too high, there could be potential refunds with interest on the interim increase.
Alliant said the increase would be statewide and is substantiated by investments made in an effort to maximize service to Iowa customers, such as the $700 million Marshalltown Power Plant currently under construction. But he said it’s also to help offset costs associated with providing some of the highest quality utility service in the country. The Marshalltown project was approved by the IUB several years ago and will come in on time, under budget and produce enough energy to power 500,000 Iowa homes.
Schmidt pointed to a recent report that didn’t rate the U.S. energy infrastructure very well.
“The American Society of Civil Engineers recently gave energy infrastructure in the US a D-, which is very bad,” Schmidt said. “However a recent article in the US News and World Report said Iowa has the number one power grid in the country. We’ve got great power here. We can harness wind and we can continue with that but we have to invest in it and that can be expensive. Our reliability is very good by national standards.”
“We want to continue to fund operations and provide excellent customer service and continue to provide the cleaner energy they expect,” Schmidt said.
A PRNewswire report published Feb. 23, based on Alliant Energy’s 2016 financial report indicated the utility had an increase in earnings per share in 2016 of .19 and the primary drivers of higher earnings were higher electric and gas margins. When asked how the utility explains an additional need of revenue to families on fixed budgets, Schmidt said the utility usually seeks returns on investments after the investments go into service.
“That’s one piece of it,” he said. “We do need that revenue going forward. We’ve made $2.5 billion in electric investments since 2010 so we want to bring that into earnings.”
He said the utility also wants to continue to manage and modernize the power grid to be able to continue to take on different sources of power continuing the transition to cleaner energy.
Schmidt also said the rate bump will be comparable across the state and will not be an equalization that happened in 2010 and hit southeast Iowa harder than some other areas. He said generally speaking the utility expects all classes to have an increase.
“Some customers have different profiles and there could be some anomalies that could happen, but we believe that what we’re going to file is fair and we won’t ask for a penny more than what we need,” he said. “We do care about our customers and encourage them to contact us if they need help with their bills. We understand there could be some tension here, but we need that revenue to cover our expenses.”
Schmidt credited the IUB with having good regulations structure and said they are very familiar with the board.
“Most of the time utility boards give slightly less than what you’re filing for, but since we haven’t been in in six years and there are three new board members, we believe it’s a very appropriate request. The IUB takes this very seriously and it will be vetted appropriately,” he said.
Both Fort Madison City and Lee County officials hinted after the budgeting process that Alliant was looking at a rate increase.
Schmidt said when considering filing for increases, the utility tries to have communication with the local governments prior to them setting budgets. However this time the budgets were set and approved prior to the filing for the increase.
“We’ll have to do a little better job of that in the future,” he said.
But he indicated that the utility generally meets quarterly with larger industrial customers to give them an outlook.
He also said there are more on utility bills that just the base rate and that rate represents about 60% of the bill for most customers and about 30% of the bill for the largest customers.