DES MOINES – More than 200,000 Iowa households served by Alliant Energy are in line for a permanent reduction in their natural gas rates after state regulators reviewed the utility’s actual expenses and revenues following a previous rate increase.
The Iowa Utilities Commission ordered Interstate Power and Light Company, Alliant Energy’s Iowa subsidiary, to reduce residential natural gas rates by more than $2.5 million.
The reduction amounts to $0.01886 per therm of natural gas used by residential customers.
The ruling is particularly relevant in North Iowa, where Alliant serves customers in Mason City and other communities throughout the region.
The decision follows a state-required review of the electric and natural gas rate case that led to higher rates for Alliant customers beginning in 2024.
NorthIowaToday.com reported in 2023 on a public forum held in Clear Lake as Alliant sought higher electric and natural gas rates. The proposed increases drew criticism from some North Iowa residents and local officials.
The controversy later reached Mason City government. In January 2024, NIT reported that the Mason City City Council was considering a resolution opposing Alliant Energy’s proposed rate increase.
The latest action stems from an unusual feature of the earlier rate case. Alliant’s rates were established in part using a “future test year,” meaning projected costs were used to determine what the company would need to collect from customers.
Iowa law then requires regulators to return later and compare those projections with what actually happened.
After examining a year of actual costs and revenues, the commission determined that Alliant’s electric operations remained within the acceptable range established by the earlier rate proceeding. As a result, regulators did not order a reduction in electric rates.
Natural gas was a different story.
The commission found that actual natural gas costs and revenues fell outside the acceptable range for the return on equity contemplated when the rates were approved. Regulators consequently ordered the permanent reduction for residential natural gas customers.
That means the decision will not lower an Alliant customer’s electric rate. The savings apply specifically to residential natural gas service.
For an example of what the $0.01886-per-therm reduction means, a household using 100 therms of natural gas would save about $1.89. A household using 1,000 therms over the course of a year would save approximately $18.86 from this particular adjustment.
Customers won’t receive refunds for amounts already paid under the previous rates. Iowa law governing this type of review allows the commission to adjust future rates but does not permit it to order refunds through the proceeding.
The commission’s examination also uncovered issues extending beyond the gas-rate calculation.
Regulators determined that spending on chartered flights for IPL executives was inconsistent with the settlement underlying the company’s previous rate case.
The commission also raised concerns involving a voluntary employee severance program and the outsourcing of call-center workers.
Those questions aren’t going away.
The commission ordered a separate investigation into IPL’s management efficiency, allowing regulators to more closely examine concerns uncovered in this proceeding as well as matters raised in other regulatory cases.
Alliant, meanwhile, said Friday that it had itself proposed a reduction in residential natural gas rates during the proceeding and called the commission’s decision a positive outcome for customers.
The company said it intends to move quickly to complete the required regulatory process and put the lower rate into effect.
The reduction is not necessarily showing up on North Iowa gas bills immediately.
IPL has been ordered to submit information explaining how it will implement the new permanent rates within 20 days of the commission’s August 26 order. The company must also file a new natural gas tariff for commission approval.
Approval of that tariff will determine when the lower residential rate takes effect.