CEDAR RAPIDS — After six years of frozen base rates, Alliant Energy customers can expect to see their electric bills increase by as much as $3 to $5 a month in April.
In about one year, the utility company expects monthly rates for the average customer to have gone up by $12 to $14 total.
Douglas Kopp, senior vice president of Alliant Energy, said Tuesday the 10 percent to 12 percent rate increase represents about $2.5 billion in capital investments into the electrical system — into such efforts as power grid upgrades and the new Marshalltown natural gas generating station — since the last rate increase about six years ago.
“Really, it’s an accumulation of several years of investment in the system,” Kopp said. “The reason for the rate case is to fund our ability to continue to provide excellent service to our customers.”
Alliant’s average customer bill is about $113 and the utility services about 500,00 customers, said Joel Schmidt, Alliant’s vice president of regulatory affairs.
Schmidt said an approximately 10 percent increase on a bill can be a bit hard to swallow for customers, but he added the utility has gone six years with zero base rate increases and operates a sizable grid.
“It’s a step now, but when you put it all in over that period of time,” Schmidt said. “That’s more than 37,000 square miles that we serve and to serve that our grid has over 20,000 miles of distribution lines ... that’s almost enough to go around the equator. That’s what we’re manning day in and day out.”
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Base rate increases are for Alliant’s electricity customers only. Base rates, which cover service costs, maintenance and utility equipment costs, make up about 60 percent of a residential customer’s bill, said Schmidt. The remaining 40 percent is for actual energy costs.
In addition, Schmidt said Alliant also will expand some offerings for customers, including those for limited income customers or electric vehicle rebates.
Alliant customers will receive public notices April 3 regarding the rate increases. Alliant will file that same day with the Iowa Utilities Board, with the first interim rate increases taking place within 10 days.
Eight town-hall sessions will be held around Iowa in late May and early June for interested customers, Schmidt said. The utilities board and the Office of Consumer Advocate also will have representatives at the meetings.
A formal utilities board hearing likely will be held in October, with shared statements from all invested parties. Schmidt said per the state process, the utilities board must approve Alliant’s request and the full rate increase is expected to take place by late this year or early 2018.
As for potential future rate increases, Schmidt said Alliant’s announcement last year to invest $1 billion into wind energy generation might also bump up the base rates when that project is completed, but renewable energy generation can bring down the energy cost portion on customer bills.
“A lot happened in the last six years what’s going to happen in the next six years?,” said Schmidt. “We believe the request we’re making now and any request we make in the future is appropriate and it’s fair to all 500,000 customers, all 83 counties that we serve and we’re not going to ask for another penny that we need, but what we need is going to have some variability as we continue to address changing industry conditions as well as changing customers demands.”
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