Alliant seeks 13.8 percent rate increase

The utility plans to ask state regulators for a 13.8 percent, $163 million annual rate increase today to pay for a new $468 million wind farm, and to improve its ability to transmit energy from renewable sources.

The 200-megawatt Whispering Willow Wind Farm in Franklin County is the first owned by Alliant's Interstate Power & Light utility.

It began operating in December, and has enough capacity to serve about 150,000 homes at full output.

Improving the transmission grid to enable transmission of power from new wind farms is a major part of Alliant's request for an additional $228 million to improve its reliability.

The third-largest item is a $188 million investment in new controls to reduce emissions of mercury and nitrogen oxides by 90 percent at a coal-burning power plant in Lansing.

The average residential customer would see rates go up by about $10.62 per month or 11.7 percent to $101.36 when the interim increase takes effect March 20, and an extra 2 percent to 8 percent when the final rates take effect later this year.

“We fully support the move towards green power, but there's a cost,” Alliant spokesman Ryan Stensland said.

Interstate Power & Light received final approval on a 7 percent rate increase in January, mainly to pay for costs of recovering from record floods in June 2008 and ice storms in recent winters.

IPL President Tom Aller told The Gazette Editorial Board on Tuesday that the utility isn't thrilled to be asking for back-to-back rate increases.

“We're very sensitive to the economic circumstances our customers are facing,” Aller said. He said Alliant decided not to carry over several requests it was denied in its last rate case.

The utility plans to offer consumer groups an incentive to settle before it goes to a full Iowa Utilities Board hearing. The proposed “cost management plan” would lower the rate increase to a total of 6 percent overall for the first three years, then increase it to 13.8 percent.

The increase would be temporarily reduced mainly by tapping regulatory reserve accounts from the sale of the Duane Arnold Energy Center to the company that's now NextEra Energy, and the sale of the company's transmission assets to ITC Midwest.

Transmission costs have jumped since Alliant sold the transmission system.

The utility is asking state regulators in the case for a transmission “rider” clause on bills that would pass along ITC's rate changes to customers in the same way that changing fuel costs are quickly tacked onto bills.

The rate increase could be considerably higher than 13.8 percent for some general service and residential Alliant customers. That's because Alliant is proposing to make the final implementation date the roll-in date for the fifth and final phase of a process to equalize rates between different Alliant service territories.