State lowers Alliant revenue increase to 9 percent from 10.1

Alliant Energy will get a 9 percent overall electric revenue increase instead of the 10.1 percent overall interim revenue increase it implemented in rates March 10, according to a final written order approved by the Iowa Utilities Board Monday.

The decision means Alliant will have to refund part of the interim rate increase it implemented on March 10, but the amount remains unclear. Alliant was still calculating how customer rates will be affected in light of myriad factors in the 160-page ruling.

The board accepted an Alliant proposal to reduce the rate increase initially by tapping reserve accounts from the sale of its transmission network and its majority state in the Duane Arnold Energy Center within the last several years. It will make the rate increase smaller during the first few years after it is implemented.

The rate increase will also be larger in Alliant rate zones that had been paying less due to historical rate inequalities. The order includes implementation of the final step in a five-year rate equalization process. General service and residential customers will be the only rate classes affected.

Alliant originally sought to raise rates by 13.8 percent or $162.5 million per year, mainly to cover rising transmission costs, new pollution control equipment at its Lansing Generating Station, and the cost of building its Whispering Willow East Wind Farm in Franklin County.

The request was lowered to $149.9 million by Alliant in the middle of the case. The board's final written order filed Monday grants an increase of $114.8 million, or about 9 percent.

Customer rates must be frozen for the next three years for Alliant to receive one of its major requests in the case – a transmission cost “rider” that will allow it to pass along transmission costs increases from ITC Midwest on a regular basis instead of filing a rate case to recover them.

The state's Office of Consumer Advocate had cited “management inefficiency” as a major factor in requesting a $5 million revenue reduction in the case, Alliant's second major rate case in just over a year in Iowa.

The consumer advocate argued that Alliant had pledged to hold customers harmless from rate increases from its sale of the transmission system, a point with which the utilities board did not agree. The board was more sympathetic to the consumer advocate's request that Alliant be forbidden from earning a profit on cost overruns at its Whispering Willow East Wind Farm.

The board did not penalize Alliant for management efficiency, saying it must balance the results Alliant has obtained in trying to lower costs against the company's actions that contributed to higher rates than necessary.