Alliant proposal: Equity, efficiency failure

The proposed Alliant rate increase is a sweeping denial of equitable treatment of customers and a rejection of environmental responsibility.

Alliant Energy, called Interstate Power and Light (IPL) in Iowa, is proposing a nearly 25 percent increase in its basic service rate. Since Alliant divides its charges to customers into energy, transmission, and basic service, the total bill increase will not be that large but it is a pretty big increase.

Since electric utilities are monopolies, some entity needs to “regulate” their actions. In Iowa this is the role of the Iowa Utilities Board (IUB), which must decide on the rate increase. The IUB can certainly reduce the proposed rate and can change the way IPL wants to charge individual customers.

Several electricity users in the Decorah area (the city of Decorah, Luther College, Winneshiek Energy District, and others). formed the Decorah Area Group (DAG) and intervened before the IUB to challenge the proposed rate increase. I wrote testimony on rate design for the DAG, and the following is the conclusion of my testimony:

It is apparent to me that IPL’s overriding desire is to sell more electricity at exactly the wrong times. The Company proposes in this case to:

•    Raise the Basic Customer Charge, which is already much higher than that of the other investor-owned electric company in the state; [$13.00 compared to $8.50 charged by MidAmerican Energy. Low-income customers use less electricity so boosting this charge hits them hardest.]

•    Reintroduce declining block rates during the summer peak period, which will likely cause IPL to add capacity for its system; [few utilities give large residential users a break for using more electricity in the summer and so again the smallest users — low income and conservationists are hurt again by this proposal.]

•    Discourage the production of solar power, when encouraging development of solar generation might help IPL to avoid adding generation do accommodate the super peak days; and,

•    Refrain from introducing a “super” off-peak rate that could redirect demand away from peak periods. [Their new meters allow them to make electricity really cheap around midnight so customers could charge electric cars or big capacity water heaters, but they aren’t doing it.]

These proposals, combined with IPL’s actions to convince the Iowa General Assembly to completely bypass the Board and greatly dismantle the state’s energy efficiency programs [in 2017], compels the conclusion that IPL wants to sell more power — not less — especially during the times of the day when IPL’s system is more costly to operate so that IPL will reap more profits.

As noted in the testimony, the Alliant/IPL proposal goes backward on both equity and energy efficiency, which are responsibilities of the IUB to ensure.

IUB’s own mission states that it “regulates utilities to ensure that reasonably priced, reliable, environmentally responsible, and safe utility services are available to all Iowans.” Note — “all Iowans.” This is IUB’s own assurance to even the least-powerful among us that they will be protected in the monopoly marketplace for electricity.

State law [476.1(5)] demands that the IUB “promote the use of energy efficiency strategies by gas and electric utilities required to be rate-regulated.” The Alliant proposal, by contrast, is a recipe for energy inefficiency.

The IUB has limited latitude to deny this rate increase. However, this rate increase is such a sweeping denial of equitable treatment of customers and a rejection of environmental responsibility that they might. The decision will only come after months of more filings and hearings. Stay tuned.

David Osterberg is co-founder and former executive director of the nonpartisan Iowa Policy Project. He is a former state legislator and is IPP’s lead researcher on energy and environment issues.

dosterberg@iowapolicyproject.org

Capitalizing on competition in Iowa

Competitions and “keeping up with the Joneses” can spur people to take advantage of the many energy-saving programs Iowa utilities already offer.

IPP last week released a report  that highlights how capitalizing on a better understanding of human psychology and behavior can drive energy efficiency and conservation in Iowa.

Will Hoyer
Will Hoyer

We initially got interested in the idea after hearing about the extraordinary results from a competition in Kansas last fall. We would love to see something similar happen in Iowa and are working to make that happen.

Apparently the idea of using competitions to spur energy efficiency and other beneficial behaviors has others excited as well. Department of Energy Secretary Steven Chu spoke on NPR last week about an initiative to get kids excited about energy efficiency. Chu said:

“In my wildest dreams, what I’d love it to be is sometime in not-too-distant future there’ll be kind of a — like a March Madness, there’ll be a lot of schools challenging other schools in their local areas for who’s going to make the most improvement in saving money and saving energy.”

Schools shouldn’t just be the only competitors. Entire towns can compete against one another. College campuses can compete. Churches. Businesses. Next-door neighbors. The truth is, we all want to “keep up with the Joneses” and if we know that the Joneses next door have a similar house and are paying less every month for their electricity then we’ll want to make the changes the Joneses made. Over time these will add up to significant savings in money and reductions in pollution and reduced need for new baseload electricity plants — whether they be coal, gas or nuclear.

Competitions and “keeping up with the Joneses” can spur people to take advantage of the many energy-saving programs Iowa utilities already offer. Many monetary incentives are out there already to replace old appliances, insulate your attic, install solar panels or upgrade your HVAC equipment. Haven’t taken advantage of those programs yet? Contact your utility to find out more. If you have reaped the benefits call your utility and ask for more!

Posted by Will Hoyer, Research Associate