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State regulators disagree with Alliant rate hike, customers to receive partial refund

Alliant's request to recover past investments in the Sixth Street Generating Station in Cedar Rapids was reduced by $3.1 million, and Alliant was denied a return on its investment for cost overrages at the Whispering Willow Wind Farm related to wind turbine purchases.

CEDAR RAPIDS, Iowa - Alliant Energy's request for a 13 percent electric rate hike was whittled down by state regulators Thursday, setting the stage for a partial refund of a 10 percent interim rate increase in effect since March.

The Iowa Utilities Board on Thursday, Dec. 15, reduced the revenue increase for Alliant's Interstate Power and Light subsidiary to $114.5 million, down $4.5 million from the $119 million interim rate increase that took effect last March. The company was seeking $149 million.

Alliant Energy last raised rates by 7 percent overall in March 2009, boosting an average residential bill $7.21 to $80.97 per month.

Interstate Power & Light President Tom Aller said the refund and rate reductions from a cost management plan proposed by Alliant will be handled through bill credits. The cost management plan will mute the effect of the rate increase in its first three years, using funds from reserve accounts established from the sale of Alliant's transmission system and majority stake in the Duane Arnold Energy Center.

Alliant may not have an accurate estimate of the way the rate increase will affect individual customers until the board's... more [truncated due to possible copyright]  

CEDAR RAPIDS, Iowa - Alliant Energy's request for a 13 percent electric rate hike was whittled down by state regulators Thursday, setting the stage for a partial refund of a 10 percent interim rate increase in effect since March.

The Iowa Utilities Board on Thursday, Dec. 15, reduced the revenue increase for Alliant's Interstate Power and Light subsidiary to $114.5 million, down $4.5 million from the $119 million interim rate increase that took effect last March. The company was seeking $149 million.

Alliant Energy last raised rates by 7 percent overall in March 2009, boosting an average residential bill $7.21 to $80.97 per month.

Interstate Power & Light President Tom Aller said the refund and rate reductions from a cost management plan proposed by Alliant will be handled through bill credits. The cost management plan will mute the effect of the rate increase in its first three years, using funds from reserve accounts established from the sale of Alliant's transmission system and majority stake in the Duane Arnold Energy Center.

Alliant may not have an accurate estimate of the way the rate increase will affect individual customers until the board's written order is issued in February, officials said.

In addition to the $114.5 million rate increase, the utility was granted a "transmission rider" it sought so that it would not have to carry escalating transmission costs from ITC Midwest, its transmission provider, between rate cases.

The ruling stipulates that Alliant's transmission rider is good for three years only if it does not raise rates during that period. The rider will remain in effect after three years for as long as the utility does not seek a rate increase, and the utility must report to Alliant on its efforts to work with ITC to manage transmission costs.

The three-member panel took about 90 minutes to render its decisions in the case, giving Alliant a 10 percent rate or return on investment in hard assets rather than the 10.5 percent it was seeking.

Alliant's request to recover past investments in the Sixth Street Generating Station in Cedar Rapids was reduced by $3.1 million, and Alliant was denied a return on its investment for cost overrages at the Whispering Willow Wind Farm related to wind turbine purchases. Board members said Alliant apparently placed the purchasing decision in the hands of one project manager without management oversight, resulting in the biggest chunk of a $45 million cost overrage.

The board decided that Alliant should not charge electric customers for all of the past investments in the Sixth Street Generating Station because roughly half the plant's output went to the plant's steam customers rather than electric customers. The plant was rendered unusable by the Cedar River flood of 2008, and Alliant decided not to restore it.

Iowa's Office of Consumer Advocate had argued for a rate reduction in the case, citing fast-rising transmission costs that made up much of the increase and wind farm cost overruns as arguments for "management inefficiency" penalty against Alliant..

Iowa Utilities Board Chair Rob Berntsen said there were not sufficient time or resources in the rate case to decide the management inefficiency claims, which have arisen for the second straight rate case. The board instead agreed to order a full management efficiency audit by its own staff of Interstate Power & Light.

Acting Iowa Consumer Advocate Jennifer Easler said she was pleased that the board agreed with many of her staff's position, but added, "We were hoping for a larger impact on the overall dollar figure for customers.

Gov. Chet Culver noted in a statement that Alliant had rejected his request that it hold off on implementing interim rates in March until the case could be decided by the board because of the tough economy, even though it was allowed by law to charge interim rates.

"I am obviously disappointed that Iowa ratepayers are being required to pay higher electric rates than consumers served by other Iowa utility companies - particularly at a time when our economy is emerging from a recession that has stretched families, businesses, non-profit organizations governmental jurisdictions very thin," Culver said.


Source: http://www.kcrg.com/news/lo...

DEC 16 2010
http://www.windaction.org/posts/29334-state-regulators-disagree-with-alliant-rate-hike-customers-to-receive-partial-refund
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