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Alliant Energy seeks rate increases, says gas and electric “base rates will go up” by as much as 24% or more

Customers of Alliant Energy received notices in recent days of a proposed rate increase.

CEDAR RAPIDS – Alliant Energy, which serves much of North Iowa, is preparing to raise rates substantially, the company announced.

Electric rates for residential customers could go up as much as 24%.  Gas rates for residential customers could go up as much as 25%.

A customer comment meeting will be held in Mason City on May 2 at the Historic Park Inn at 11:30 AM.  Customers may file a written objection with the Utilities Board; the online comment form is available at eft.iowa.gov.

FROM ALLIANT ENERGY:

This month, two new wind farms from Alliant Energy’s Iowa energy company will start generating low-cost, renewable energy. These projects are the first of the company’s $1.8 billion expansion in wind energy to start serving Iowa customers. Three more wind farms are expected to come online in 2020.

Combined, the Upland Prairie and the English Farms wind farms can provide clean power for 168,000 homes a year, while also helping lower fuel costs on monthly bills. The fuel needed to produce wind energy is free and does not create emissions. These additions to Alliant Energy’s energy mix are expected to save customers around $25 million in fuel costs in 2019. In 2020, the fuel cost savings from the wind expansion are expected around $60 million, with additional savings into the future.

Today, Alliant Energy’s Iowa energy company filed proposals with the Iowa Utilities Board (IUB) to recover the costs of these and other investments. The company is requesting an increase in retail electric and retail natural gas base rates.

Electric request

“Our investments in wind energy will bring long-term benefits to Iowa,” said Terry Kouba, President of Alliant Energy’s Iowa energy company. “Beyond being renewable, wind energy delivers lower fuel costs for customers, property taxes to communities and lease payments to landowners.”

In addition to more clean energy, the electric request is driven by enhanced reliability and customer service investments. These include adding underground wires to reduce outages and tools on the energy grid that automatically report and respond to outages. The company is also installing stronger distribution lines to increase reliability and support the integration of customer-owned renewable energy.

As part of this request, individual elements of the bill are changing because of the investments and initiatives from the company. Base rates will go up. However, customers are expected to see lower fuel costs, lower transmission costs and lower energy efficiency costs. The company is also continuing to identify operational efficiencies to reduce customer costs.

As a result, overall customer bills are projected to increase by approximately two percent in 2019 and five percent in 2020.

The impact to a customer’s bill will vary by customer type and usage. A typical residential customer with a monthly electric bill of $116 will see a total increase of approximately $8 per month starting April 1, 2019. And, if approved, residential customers would see an additional projected increase of $12 per month

Natural gas request

“Our investments in the natural gas system are delivering continued resilience supporting customers in the state. Continued development in the natural gas distribution system showed its value in our ability to meet high demands during the incredibly harsh polar vortex we saw this winter,” said Kouba.

The natural gas request is driven by continued replacement of aging materials, addition of advanced metering infrastructure and additional inspection and safety equipment.

As part of this request, individual elements of the bill are changing because of the investments and initiatives from the company. Base rates will go up. However, customers are expected to see lower energy efficiency costs and continued low commodity costs of natural gas. Overall customer bills would increase approximately three percent from 2019 to 2020.

The impact to a customer’s natural gas bill will vary by customer type and usage. If approved, the changes would take effect starting January 1, 2020. A typical residential customer with a monthly natural gas bill of $54 will see a total projected increase of approximately $7 per month over 2019 bills.

Summary of key financial elements of the rate request (electric)

Alliant Energy’s Iowa energy company is requesting a total increase in annual retail electric revenues of $204 million. The requested increase would take place in two phases: $90 million through interim rates starting April 1, 2019, and the remaining increase of $114 million when final rates are implemented in 2020.

  • Interim retail electric rate base of $5.1 billion includes investments in cleaner energy through expansion of our wind resources and environmental controls, new grid technologies, and customer service investments.
  • The 2020 proposed rates include:
    • Retail electric rate base of $6 billion including deferred tax assets for production tax credits
    • Return on construction work in progress of $0.1 billion
    • Return on common equity (ROE) of 9.8 percent. The 1,000 MW of new wind, Marshalltown, Whispering Willow-East and Emery generating stations received advance ratemaking principles with separate ROEs set for those assets
    • Common equity component of regulatory capital structure of 53 percent
    • Increased depreciation expense supported by an updated depreciation study
    • Recovery of remaining net book value of Sutherland Generating Station retired in 2017, M.L. Kapp Generating Station retired in 2018, and retired electric meters
    • A renewable energy rider
Summary of key financial elements of the rate request (natural gas)

Alliant Energy’s Iowa energy company is requesting a total increase in annual retail revenues of $21 million.

  • The 2020 proposed rates include:
    • Retail rate base of $570 million includes infrastructure investments and customer service investments
    • Return on common equity (ROE) of 10.0 percent
    • Common equity component of regulatory capital structure of 53 percent

The IUB has ten months from the date of filing to issue a final decision. The proposal is available on the IUB’s electronic filing system under Docket No. RPU-2019-0001 for electric and RPU-2019-0002 for natural gas. Copies of the customer notice and other information is available at alliantenergy.com/iowarates.

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