State board approves delay of Alliant Energy's rate change: Date for next equalization step to be determined.

Jun 11, 2009 (The Hawk Eye - McClatchy-Tribune Information Services via COMTEX) -- INPCN | Quote | Chart | News | PowerRating -- The Iowa Utilities Board recently approved a request by Alliant to postpone the fourth of five step changes in residential electric rates intended to equalize electric rates across the company's service areas.

On April 20, Interstate Power and Light Co. -- the Iowa utility subsidiary of Alliant Energy -- filed to have the scheduled June 30 rate change postponed until Sept. 16.

While the state utility board, which regulates utilities in the state, agreed to postpone the rate change, it did not approve the Sept. 16 date. Instead, the board said it first needs to examine additional information regarding the company's rate base, according to a utility board order issued May 26.

Both the current rate change being reviewed and past rate equalization changes were approved based on 2003 data, which did not take into account changes in Alliant's overall revenue requirements nor changes in its class revenue levels.

The utility board wants to re-evaluate these factors before approving another rate equalization change.

"If you think of it in terms as baking a pie and adding ingredients, instead of adding two teaspoons of sugar, you have added two and a half teaspoons of sugar. So we have to adjust everything because the rate equalization process is no longer based on 2003 revenue data, it will be based on 2008 revenue data going forward," said Alliant Energy spokesman Ryan Stensland.

Had the June 30 revenue rate change been implemented, Southern zone customers, including Burlington, would have seen a 2.99 percent increase while northern zone customers, including Fort Madison and Keokuk, would have see a 1.84 percent decrease in their base rates.

Only residential customers would be affected by the change. Industrial customers' rates already have been equalized.

Alliant had hoped to implement the next rate change Sept. 16 because it coincides with the shift from summer rates to winter rates.

Summer rates -- which run from June 16 to Sept. 15 -- are 15 percent to 20 percent higher than winter rates, depending on customer class. Summer rates are higher because it is a period of high usage and the company has to spend more money to provide enough electricity to its customers.

Implementing the rate change in September would minimize the number of rate changes residents see this year.

In addition to the anticipated seasonal rate increase this month, all Iowa Alliant customers saw their electricity costs go up in March when the company implemented a temporary 7 percent revenue increase costing customers $84 million.

The temporary increase is part of a 16.6 percent revenue increase Alliant has requested of the utility board.

The utility board, Alliant and the Iowa Office of Consumer Advocate, which represents customer interests, are gathering information on the issue. An evidentiary hearing for the proposed rate increase will begin Oct. 9, and a final decision is anticipated in January.

Residential electric rates across Alliant's territory vary due to a series of company mergers that began in the early 1990s.

Alliant Energy was formed by the merger of three companies in the mid-1990s, which the utilities board approved with the condition the company freeze Iowa rates for four years. When the mergers took place, each company had its own electric rates.

However, those with higher rates felt they were subsidizing the electricity of those with lower rates and asked for fairness.

After a series of public meetings, state officials decided to equalize the rates by decreasing costs in the northern zone and increasing them in the southern zone, as well as a third zone referred to as IPC.

Alliant does not make any additional money off the rate equalization.

"We're not making any additional dollars nor losing any additional dollars. It's just a reallocation of the pie," Stensland said.

Residential customers are on a five-step equalization schedule, while industrial customers have completed a three-step plan.

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