MidAmerican Energy Co. is asking the Iowa Utilities Board for an increase in its base electric utility rates and charges to go into effect in August.
The proposed rate increase affects only the electricity portion of a customer’s bill, and has no effect on the natural gas portion, MidAmerican representative Tina Potthoff said Friday.
While the rate increase is only for Iowa residential and commercial customers, the company is evaluating a rate increase for Illinois customers, she said.
“We want to make it clear that our announcement on our wind energy expansion is not related to this rate increase,” she added, referring to a $1.9 billion project announced Wednesday. “We’re utilizing federal production tax credits for that project.”
The request for a base rate increase comes on the heels of last year’s energy adjustment clause rate increase that the Iowa Utilities Board approved based on MidAmerican’s higher transportation, coal fuel and environmental costs.
“The adjustment clause increase is for a specific reason, such as to pay for the higher fuel costs we incurred when prices went up, and for environmental costs,” Potthoff said.
She added that this is the first base rate increase MidAmerican has requested since 1995. If approved, it will be phased in over three years beginning with an interim rate increase the company is requesting to take effect Aug. 15.
“The base rate increase is to cover expenses across the company, and includes the price of materials for keeping the system up and distributing power,” she said.
The rate increase could mean an annual revenue increase of $45.2 million for the remainder of 2013 and through 2014, $45.2 million in 2015, and $45.2 million in 2016.
The company has been working on the rate increase proposal, “so it is not new,” Potthoff said. “We’re already been working with our industrial and large business customers on this.”
Potthoff said that while the wind energy project is not a part of the rate increase proposal, “the wind expansion could turn this around in the future, and benefit customers by causing these average monthly increase figures to drop after the project is built.”
The wind energy project should be completed by year end 2015, she added.
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Potthoff said that while other utility companies across the nation are asking regulators for double-digit increases within a year’s timeframe, MidAmerican is proposing that its base rate increase be phased in over three years and include monthly adjustments for fuel and transmission costs, as well as an adjustment to equalize rates across three geographic zones in its service territory.
Under the rate equalization proposal, rates will be adjusted annually for 10 years in equal increments. Depending on a customer’s zone, the result of rate equalization could increase or decrease rates.
The reason for the plan is that in 1995, MidAmerican Energy was formed through a merger of utility companies, resulting in three different zones for Iowa customers and three separate sets of electric rates. Potthoff said the company has taken steps to reduce the differences between some of the rates in each zone, and that this plan would help.
She added that the equalization proposal will not increase revenue for MidAmerican Energy.