BY CHUCK VANDENBERG
FORT MADISON – Officials from Alliant Energy’s Interstate Power & Light Company and members of the Iowa Utilities Board held a public hearing on Thursday in Fort Madison to discuss a proposed 12.5% rate increase on residential usage, as well as other rate increases for other sectors.
The meeting, held at McAleer Hall, was attended by about 25 people and about seven of those spoke with the two organizations about the increase. Attorneys from the Office of Consumer Advocacy representing the citizens of Iowa in these types of rate increases were also on hand.
Alliant filed the rate increase, its first in six years, on April 3 with the IUB and is asking for a revenue increase of $176 million annually. That equates, according to the IUB, with a 12.5% average residential monthly bill increase or about $14.26 depending on usage. For commercial users the increase is lower at 11.6% averaged or $33.04/month based on usage. The utility already has an interim rate increase in effect and if the board deems that is higher than what is ultimately approved by the board, the utility would be subject to pay a refund plus interest to customers.
The Pen City Current originally wrote an article on this rate increase on March 13. At Thursday’s meeting Joel Schmidt, vice president of regulatory affairs reiterated that the main driver of the rate increase was to start to recoup on investments already made in Iowa totaling $2.5 billion since 2010, including a $700 million natural gas facility in Marshalltown.
State Rep Jerry Kearns (D-Keokuk) was in attendance and spoke to the board asking them to proceed with caution and think about their action.
“I’m not in your service delivery area in Keokuk but I have received some comments from people that I represent in my district and you can probably imagine they’re not very positive,” Kearns said.
“I’d like to know a breakdown where the increase is being utilized. For example upgrades, equipment, purchase of power on the grid, wages – I think those would all be important to understand with this increase that’s being proposed,” Kearns asked the board.
After the meeting Kearns said Alliant has been a very good company for Iowa.
“Well their last increase was six years ago and if you divide the increase over those six years it’s not so bad, but wages have been stagnant for that time and the bottom line is people hate any increases in costs,” Kearns said. “But we still have people on fixed incomes. That’s the concern. They are good company though, they really are.”
Lee County Supervisor Rick Larkin also addressed the groups and cautioned the board on raising the rates too high as Lee County has a high ratio of residents on fixed incomes.
“We have to understand the impact these increases will have on people with fixed incomes and will they be able to absorb this increase. Some will and some may not. For commercial and industrial, this increase could cause some to look elsewhere. We really need to remain competitive. So I ask the board when making their decision to please be fair.”
After the meeting, Larkin said he wasn’t there representing the board of supervisors but representing his constituents.
“I have to think about Ma and Pa here in Lee County and whether they can afford this,” Larkin said. “Most of the time with these types of requests the utilities come in asking for a rate, but the board settles on another.”
Fort Madison Partners Executive Director Tim Gobble also spoke to the board.
“As with any budget whether residential, commercial or industrial, if there is an increase in line items, there is a negative effect in others,” Gobble said. “The proposed increase will touch everyone of these rate classes in some way. Our industry will feel it the most as they are our heaviest users and they will need to look at ways to absorb that increase. The rate proposed will definitely have an impact as none are poised to pass that along to their customers which equates ultimately to job loss and business risk. We need to make sure we are looking out for their best interests.”
Gobble also acknowledged the contributions and infrastructure investment such as rebuilt power stations in three different locations in Fort Madison and recognized the partnership with Alliant has helped economic growth in the area.
“Infrastucture investments such as these will deliver a more reliable service to residents and businesses in the area. More reliability means fewer outages. Alliant has always been there playing a critical role, especially when prospects are looking to locate in our region.”
Dennis Fraise, also commended Alliant’s role in helping Lee County meet its growing demand for electricity, including two substations at a price tag of about $5 million. Fraise said he wasn’t on hand to support or oppose the rate increase.
“Alliant is one of our key partners when we try to work on expansion or bringing in another industry. It’s a real competitive advantage for us when we have a utility partner when we work on projects like this we get a comment such as “when we work with Alliant we don’t get a no, we get a yes,” Fraise said.
Schmidt reiterated to the group that Iowa has been graded the top electrical grid in the country.
“The American Society of Civil Engineers recently gave energy infrastructure in the US a D-, which is very bad,” Schmidt said in the March 13 article. “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.