Higher energy rates proposed by Alliant

Increase would be separate from rate equalization

By MATT MILNER Courier staff writer

OTTUMWA — Alliant Energy’s Iowa customers are likely to see a rate increase next year of anywhere from 6-10 percent, a jump separate from the rate equalization that has already repeatedly raised rates in southeast Iowa.

Spokesman Ryan Stensland told the Courier the company is likely to formally ask for the increase sometime late in the first quarter of 2009. That most likely means next March. The formal request to the Iowa Utilities Board triggers the start of a 10-month process, the first step of which is institution of interim rates representing a portion of the request.

Regulations require the implementation of the interim rates within 10 days of the initial request. After that, the utilities board will hold hearings sometime in the late summer, with final approval and full implementation of the rate hike likely in January or February 2010.

The plans for a rate hike are not finalized, though the company is serious enough about the increase to begin discussions with some major customers and brief the Alliant board of directors on the proposal.

“We have not made a final decision on whether we’re going to seek a rate increase,” Stensland said.

He said this is the company’s first increase unrelated to rate equalization since 2004, but area customers are unlikely to be mollified by that. Alliant fought for a rate equalization after acquiring utilities in southern Iowa that had provided lower rates.

That process, which the company says will put rates in Ottumwa and areas like Cedar Rapids and Dubuque on equal footing, triggered angry protests from customers in southeast Iowa. State Rep. Mary Gaskill and state Sen. Keith Kreiman even went so far as to propose bills in the 2005 Iowa legislature to let cities break franchise agreements with utility companies.

Those bills failed, and Alliant in 2006 raised rates in the company’s southern zone by 3.2 percent. Customers in the northern zone saw rate reductions of 1.6 percent.

Customers in both zones are subject to the new proposal.

Wapello County Supervisor Jerry Parker called the increase “a knife in the heart of economic development.

“We, just a few months ago, were talking to a Dutch firm,” Parker said. The company had Wapello County as a finalist for a new facility, but then it got copies of the projected utility costs. “They ended up going to Nebraska.”

The increase for Wapello County, assuming Alliant gets what it wants, will be $20,000-$25,000 per year. And that’s before the final rate equalization hike comes into play. The impact on county residents will be lower, but will still strain those with low or fixed incomes, Parker said.

Stensland said the company believes three points justify the increase. He pointed to the need to increase reliability and recoup investments in the company’s infrastructure, emission control requirements, and the past year’s unusual weather. Ice storms last winter knocked out lines in much of Iowa, and Stensland said this year’s floods also required repairs.

Other areas of the country saw major storms over the past year, and at least one utility company in the St. Louis, Mo. area responded by burying lines to make them less vulnerable to the weather. Stensland rejected that approach, saying it is both cost prohibitive and that new innovations allow the lines to bear more weight from ice and withstand higher winds.

Ottumwa Mayor Dale Uehling acknowledged the impact of weather on Alliant’s bottom line, but said the city still won’t welcome the rate hike. That said, he doesn’t see much the city can do aside from protesting, filing a formal objection, and asking residents to object during any local hearings on the increase.

“Our electricity and gas has already increased tremendously,” he said. “We’re getting ready to do our budget. [This increase] will affect our current budget that we’re in and the one we’re preparing for 2009-10.”

Uehling said the city is taking some steps to cut electrical costs, such as installing stoplights with LED lights that use less power and removing some lights entirely.

Alliant publicly announced income of $108.5 million for the third quarter 2008, down from $119.6 million the previous year. The company blamed cooler summer temperatures and the June flooding for the drop.

Matt Milner can be reached at (641) 683-5359 or via e-mail at mwmilner@mchsi.co