Alliant Energy’s basic charge to deliver natural gas won’t increase for three years under a voluntary settlement between the utility and consumer groups approved by the Iowa Utilities Board Monday.
The settlement provides for Alliant’s Interstate Power and Light subsidiary to receive $10.5 million in additional revenues per year, or an overall increase of 3.99 percent.
A cost management plan included in the settlement provides for that increase to be offset for the first three years by applying $12 million annually from tax benefits the utility is receiving due to things like recovery from the June 2008 flood and repair expenditures.
A typical residential customer will actually pay about 39 cents per month less during the first three years.
When the full rate increase tax effect after three years, customer billings are expected to go up by about $3 per month for a typical household from their current levels.
The actual impact on the bottom line of customer bills probably won’t track with the projections because of fluctuating natural gas prices and changing weather conditions that affect customer’s bills.
IPL had been seeking an annual revenue increase $14.8 million or 5.6 percent. The utility was seeking to recover about $70 million it had invested in its natural gas distribution system its last natural gas rate case. The expenditures were made on things like adding capacity and installing more natural gas lines.
A tentative settlement was reached late last summer between IPL, Iowa’s Office of Consumer Advocate and the Iowa Consumers Group. The Iowa Consumers Group is made up of two large industrial customers, Archer Daniels Midland Co. and Equistar Chemicals L.P.
IPL President Tom Aller said the company was pleased with the outcome, adding that it means customers will continue to enjoy some of the lowest natural gas prices in years.
Aller also expressed appreciation to the consumer groups for reaching a settlement the utilities board could approve.
The voluntary settlement will save the costs of a full regulatory hearing with witnesses before the Iowa Utilities Board. Those costs are typically passed along to IPL customers.
The utilities board awarded Alliant a 10 percent return on its equity invested in the natural gas system, slightly less than the 10.9 percent argued for by an IPL expert witness.
Cedar Rapids-based IPL provides natural gas service to more than 240 communities, including Ames, Marshalltown, Mason City, Clinton, Muscatine, and Burlington.
An overall increase of 3.99 percent is called for in the settlement approved by the Iowa Utilities Board Monday, which provides for an annual revenue increase of $10.5 million.
A cost management plan in the settlement uses $12 million per year proceeds from corporate tax recoveries by Alliant avoids any increase in the first three years. A typical residential customer will actually see their cost of natural gas service go down by about 39 cents per month, according to Alliant spokesman Justin Foss.
Alliant’s Interstate Power and Light subsidiary had been seeking an annual revenue increase $14.8 million or 5.6 percent.
A hearing by the Iowa Utilities Board on the case scheduled to begin Dec. 3 was canceled.
IPL President Tom Aller said the company is pleased at the outcome and appreciates the efforts of all parties to come to a settlement that the Iowa Utilities Board could approve. He said customers will continue to benefit from some of the lowest natural gas costs in years.