Alliant agrees to three-year rate freeze, says bills will drop 2 percent

Alliant Energy Wednesday said it's agreeing to terms of a three-year rate freeze offered by the Iowa Utilities Board in exchange for implementation of a “transmission rider” that will let it pass along escalating transmission costs quickly.

The utility issued its analysis of Monday's written decision in the complex rate case Wednesday. It says its residential customers will soon see a roughly 2 percent dip in electric rates from the interim rates that went into effect in March 2010 because of a cost management plan the company will implement with board approval.

A typical residential customer of Alliant's Interstate Power & Light utility paid about $101 per month since the interim rates took effect in March 2010. The typical monthly payment will dip to $99 after effects of a December 2010 rate decision by the Iowa Utility Board are factored in, the utility said.

The $200 million cost management plan is expected to credit customers about $64 million in 2011. It will appear as a reduction in the energy cost line on customer bills, generating an average monthly savings of about $3.79 per month.

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.

Interim rates the company is allowed by law to charge while a rate case is pending were a 10.1 percent increase, on top of a 7 percent increase that took effect in March 2009.

Allliant lowered its overall 2010 rate case request to $149.9 million after it was filed. The board's final written order granted an increase of $114.8 million, or about 9 percent.

Some customers will receive a rate refund due to the ruling, while others will not depending on such factors as their customer class and rate zone. Refunds will be provided through a bill credit and include interest, the company said.

Alliant did not provide a comparison of rates customers were paying before the rate case compared to rates they will be paying after the cost management plan terminates, exclusive of future changes in transmission expenses.

The Iowa Utilities Board said a typical monthly bill for a customer in Alliant's IES-Northern rate zone will increase from $68.71 per month before the rate case (based on winter rates and 12-month average monthly use of 750 kilowatt hours) to $71.26 after the rate case. That's an increase of about 12.4 percent.

The rate case includes the final step of rate equalization between Alliant's rate zones. As a result, some rate zones willl see larger increases.

The typical rate increase for a residential customer in the IES-Southern rate zone will increase from $64.55 per month to $77.26 per month, an increase of 19.7 percent. For the IPC rate zone, typical monthly costs will increase from $66.38 to $77.26, an increase of about 16.4 percent.

Typical rates would have increased to about $81.70 per month under Alliant's original increase proposal, the utilities board said.