Article

'Cost recovery' for Alliant will cut businesses, customers deep

A proposed 14 percent increase from Alliant Energy for electrical rates would not only be a burden on some residential customers, but could affect expansion for local businesses. ...IPL representatives say they need the money to recover costs for "green" energy investments. The 14 percent raise - or $163 million - will fund expenses from Whispering Willow Wind Farm, a $468 million project, and major investments in distribution and transmission infrastructure.

A proposed 14 percent increase from Alliant Energy for electrical rates would not only be a burden on some residential customers, but could affect expansion for local businesses.

This was expressed to Iowa Utilities Board (IUB) and Interstate Power and Light Company (IPL), an Alliant subsidiary, during a public hearing on April 21 in Osceola. About 30 concerned citizens and business owners pleaded their cases to the board, many asking when will the increases end?

Wil Reisinger, owner of Anchor Motors, said the increase sounded all too familiar.

"We were all here when you asked for a rate increase last year... less than 12 months later we're looking at another increase," he said. "I just don't quite understand how you can come back year after year after year looking for an increase when our business is down...It's an unbelievable burden on businesses and people."

The rate request comes on the heels of a 7 percent increase in 2009 that was made permanent this January. IPL originally requested 17 percent.

WHAT'S THE EFFECT?

A temporary electrical rate increase began in March, which raised the bill for a residential customer with 750 kilowatt-hours of energy usage by an estimated... more [truncated due to possible copyright]  

A proposed 14 percent increase from Alliant Energy for electrical rates would not only be a burden on some residential customers, but could affect expansion for local businesses.

This was expressed to Iowa Utilities Board (IUB) and Interstate Power and Light Company (IPL), an Alliant subsidiary, during a public hearing on April 21 in Osceola. About 30 concerned citizens and business owners pleaded their cases to the board, many asking when will the increases end?

Wil Reisinger, owner of Anchor Motors, said the increase sounded all too familiar.

"We were all here when you asked for a rate increase last year... less than 12 months later we're looking at another increase," he said. "I just don't quite understand how you can come back year after year after year looking for an increase when our business is down...It's an unbelievable burden on businesses and people."

The rate request comes on the heels of a 7 percent increase in 2009 that was made permanent this January. IPL originally requested 17 percent.

WHAT'S THE EFFECT?

A temporary electrical rate increase began in March, which raised the bill for a residential customer with 750 kilowatt-hours of energy usage by an estimated $10.62 or 11.7 percent. The company expects the new rate to raise annual electric revenues by $119 million.

The interim rate will stay in effect until a decision is reached by IUB, a three-member board appointed by the governor to oversee utility increase requests. Alliant is asking for an additional 2 to 8 percent on top of the temporary rate. IUB is expected to rule if the rate is justified in January 2011.

If the final rates established by the IUB are lower than the interim rates, IPL will refund the difference to customers.

IPL representatives say they need the money to recover costs for "green" energy investments. The 14 percent raise - or $163 million - will fund expenses from Whispering Willow Wind Farm, a $468 million project, and major investments in distribution and transmission infrastructure.

"We are investing nearly $1 billion in 2009 and 2010 to create a clean and reliable energy future for all Iowas," President of IPL Tom Aller said. "Our investments focus on expanding renewables, reducing emissions and enhancing reliability. With our investment in the Whispering Willow East Wind Farm... we are powering the equivalent of nearly 50,000 homes with clean, renewable energy."

Some in attendance questioned why customers should carry the burden of these improvements.

"We weren't asked if it was a good time to make that investment, but now we're getting asked to pay for it," said Executive Director of Clarke County Development Corporation Bill Trickey.

BUSINESS IMPACT

Osceola Foods, a company that employs nearly 700 people, could be affected to the tune of $297,000 a year by the increase, said General Manager Steven Weers.

Weers said the raise would make it hard to compete with other food processing companies, but also within his own corporation. Weers said amongst 18 plants in the area, 12 have cheaper electricity rates than the Osceola location.

"If we're going to expand and bring jobs to our city, we need to be competitive even within our company," he said.

Other Hormel Foods Corporations in Iowa are paying less than 5 cents per Kilowatt hour, while Osceola Foods pays more than 6 cents.

"That's a big difference," he said.

According to Weers, the company has been working to improve its sustainability and meets with Alliant Energy monthly to discuss other environmentally friendly ways of doing things.

NOT THE RIGHT TIME

The state of the economy played on everyone's mind at the hearing.

"The timing of the increase is especially difficult for us in southern Iowa," said Trickey.

Trickey later added, "Many employers are family-owned businesses that have laid off large numbers of people... and are trying to bring them back slowly. This kind of setback slows the process even more."

Schools that are already facing a budget shortfall will have to dig further in the budget to find room for the hike, which will affect Clarke district by $20,000 a year. Currently the school pays about $120,000 a year in electrical costs.

"I was shocked and disappointed when I saw that," Clarke Superintendent Ned Cox said in a previous interview. "I think the utility companies chose the absolute wrong time in history to be jacking up electricity rates for anybody... I think it's totally irresponsible."

Jerry Loy of Murray said in all of his years that he's worked for Clarke County, he's never been given the type of raise the electrical company is asking for. Loy added his wages were froze the last two years.

"And here you're talking about 11.7 percent...that (doesn't) add up well for me," he said.

Aller said the company's employees also took a pay freeze and no bonuses will be handed out this year to save money. IPL is using other cost-saving measures to lessen the blow to its customers.

"We understood the economy was not in good shape...we're trying to do the various same things that our customers are doing (to save money)," Aller said.

Later he added, "Could we do better? Perhaps. You can always do better... but we're proud of how we've controlled our costs."


Source: http://www.osceolaiowa.com/...

APR 28 2010
http://www.windaction.org/posts/26017-cost-recovery-for-alliant-will-cut-businesses-customers-deep
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