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Iowa approves $127M electricity rate increase for Alliant utility

Iowa regulators signed off on a deal for Interstate Power & Light Co. to get a $127 million electric base rate increase but also directed the Alliant Energy Corp. subsidiary to improve its relationship with customers.

The Iowa Utilities Board on Jan. 8 approved a partial settlement agreement the utility, known as IPL, reached last fall with groups representing customers, environmental interests, employees and others. Along with cutting IPL's initial request for a nearly $204 million increase, the deal called for a return on equity of 9.5% for all assets that do not have advanced ratemaking principles. IPL initially asked for an ROE of 9.8%.

The agreement also included provisions for the company to undertake a resource planning process for its generation fleet, recovery through a new renewable energy rider for facilities built as part of IPL's push to add 1,000 MW of new wind in Iowa and customer refunds.

With the board's order, IPL will refund $7.5 million to customers who paid interim rates that took effect April 1, 2019. IPL customers will also see a slight increase in monthly customer charges. For residential customers, the fee will climb from $11.50 to $13, while general service customers will pay $20, up from $19.

Regulators set a monthly charge of $4.06 for customers who opt out of getting an advanced metering infrastructure meter but did not allow IPL to charge a fee to customers who choose a reduced-pulse meter. The board noted that its order also sets a regulatory principle that the ROE on interim rates cannot be higher than the ROE for proposed final rates.

Alliant Energy spokesperson Justin Foss said the decision allows the company to not only continue to provide safe and reliable service but also to promote clean energy and deliver its environmental and financial benefits to customers and communities.

"The IUB's order supports the work we've done to collaborate with customers," Foss said in an email. "In 2020, we expect customers will see an enhanced effort to bring them along in the process of powering tomorrow."

Board wants better customer relationship

Pointing to evidence in the case showing that IPL has not efficiently managed its relationships with its customers, the board gave the company 90 days to file a plan outlining how it intends to improve those relationships.

Regulators cited complaints from customers about IPL's service, including how the utility handled the rollout of advanced metering technology, and declining customer satisfaction evaluations. The board also took issue with information IPL provided about its future rate case plans to the residents of Decorah, Iowa, when the city considered municipalization in 2017 and 2018.

The board said as part of its improvement plan, IPL must "proactively engage with stakeholders and consider community-specific solutions to identifiable concerns." The company is also to meet each month with the board's customer service staff to address trends in customer complaints, regulators said.

"The board will monitor IPL's progress and expects IPL to provide evidence of increased customer satisfaction, including but not limited to: a reduction in customer complaints, reduced average call wait times, and an increase in its J.D. Power customer satisfaction score," the order said.

In a partial dissent, board member Richard Lozier said IPL customers are entitled to a bigger refund, and regulators should have done more to ensure the company improves its management efficiency.

According to Lozier, the partial settlement did not explain how the parties came up with a $7.5 million refund for interim rates. Since the interim rates took effect, IPL collected $15 million from customers, and that is the amount the company should give back to customers, Lozier said.

On the issue of management efficiency, Lozier said the board should have cut the level of IPL's profits or changed the revenue requirement until the company shows it has made improvements. (IUB Docket No. RPU-2019-0001)