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Alliant plans 2nd rate hike; Rep: Will file after IUB rules on 17% request
by Gregory R. Norfleet · News · May 20, 2009
An Alliant Energy representative said Monday that the company will likely ask for another rate increase next year above and beyond the 17- to 18-percent rate increase already filed with the Iowa Utilities Board that is causing an uproar from consumers.
That did not sit well with council members who questioned the need for the first, $171 million increase.
Alliant filed its request for the increase on March 17 to cover about $250 million in repairs from the June flooding and $350 million in other repair and restoration projects.
Alliant strategic liaison Darrell Stalzer said next year’s rate increase request will be to cover the cost of a $425 million Whispering Willows Wind Farm in Iowa Falls.
City Council member Mark Worrell did some quick figuring and said that the 2009 request, if approved by the IUB in January, would pay for the wind farm in four years, so he could not understand the need for two rate increases in two years.
“I’d love to raise my rates that much” without losing customers, Worrell said, alluding to his excavation and grading business.
Stalzer said the second rate increase amount is uncertain and will be greatly affected by the outcome of the 2009 request. He also acknowledged that the rate increase is coming during a nationwide recession.
“If we could pick a time to go for a rate increase, we would,” he said, noting that the electric markets “took a significant drop” in January and February. The company in April announced layoffs, the end of 401(k) matches and the beginning of mandatory, unpaid weeklong furloughs for its staff.
“We empathize,” he said.
Council member David Johnson said he doubted that, noting that Alliant recorded $72.6 million in net earnings in the first quarter of 2009, up $4.5 million from 2008. Stalzer said he was unaware of those figures, which appear on Alliant’s Web site.
Johnson quoted Alliant CEO Bill Harvey, from the report, where he stated that the company saw a mix of losses and profits between its utilities and non-regulated holdings.
“‘We believe our most difficult quarter is behind us and anticipate producing stronger results for the balance of the year,’” Johnson read from Harvey’s comments in the quarterly report.
Johnson said that sounded to him like the company wants “to keep shareholders happy, and not customers.”
Johnson asked Stalzer if the company would survive if the rate increase was rejected.
“I don’t know,” Stalzer said. “I’m not part of the team that answers plan B.”
Resident Tom Junker said that he has never heard of the IUB turning down a rate increase.
“I think ... the IUB will give you whatever you want,” he said. “You want a huge increase, and after we pay for this, (you won’t) drop it back down. That 18 percent increase is forever. It’s really beyond ridiculous.”
After nearly 90 minutes of discussion, Stalzer reiterated that the company has to take out loans, spend money, then ask the IUB for permission to recover it.
“I’ve spent 1 1/2 hours explaining what we do and why,” he said. “We can only collect on investments after the fact.”
Stalzer said Alliant carefully considers its rate increases, especially the interim rates, because if the IUB determines a utility is overcharging customers, the money must be refunded with “punitive” interest.
Mayor Sandy Hatfield said citizens have not only expressed concerns with the increase, but the quality of service. Council member Ken Peplow said he once lived in Washington state, in a town with stronger winds and many more trees, and experienced fewer outages than here.
Joe White, Alliant’s manager of customer services for an area that includes West Branch, said he would have to know more about that town’s electric service before he could compare. He did say that West Branch has a lot of squirrels, referencing an outage in March where more than 1,100 customers were powerless for about two hours at lunchtime on a sunny day.
White passed around a section of insulated wire to show how much the squirrel had to chew through to strike wire.
“That was one in a million,” he said. “That was a very determined animal.”
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