Alliant Energy seeks 7.9% boost in residential natural gas rates

Alliant Energy is asking the Iowa Utilities Board for permission to boost residential natural gas rates 7.9 percent.

The company, through its subsidiary Interstate Power and Light, was expected to file a rate case today seeking an overall natural gas revenue increase of $14.8 million, or 5.6 percent.

The request is toward the high end of a 4-6 percent range the company indicated earlier this month that it was planning to seek.

Interstate Power and Light President Tom Aller, in prepared remarks, said the company has invested more than $70 million to improve the safety and efficiency of its natural gas system since its last rate increase seven years ago. He said the company's mix of natural gas customers and their usage patterns has also changed since the last rate hike.

The utility is asking to use $36 million in federal tax benefits to dampen the impact of the rate increase on customer bills for the first three years.

If the cost management plan is approved it would completely erase the increase in the first year following the implementation of new rates, erase 80 percent of the rate increase in the second year, and erase 40 percent in the third and final year.

Beyond touting its cost management plan, Alliant pointed out that customers' overall bills have been lower due to natural gas costs, which have been in decline for several years.

Alliant simply passes along the cost of the gas it sells, but is compensated for distributing it to customers.

The utility said interim rates are expected to take effect on June 4, raising the average residential cost of natural gas per therm to $1.03 from the current average of $1.00 per therm.

After final rates take effect on or before April 2013, the average cost per therm is expected to rise to around $1.08 before the effects of the cost management plan are factored in.

A typical residential customer uses about 63 therms of natural gas per month. For a customer using that typical level, the monthly natural gas bill would rise by $5.07.

The company is seeking a return on equity of 10.9 percent for its investment in the natural gas system.

Alliant Energy is the natural gas provider for Vinton, Mount Vernon, Lisbon, Washington, and Center Point, Urbana, Amana and Williamsburg.