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

Investor-owned utilities must deal with climate change

Climate change is a reality and the investor-owned utility companies must adjust their business model to contend with it.

Editor’s Note: This post is excerpted from a statement by David Osterberg, founder of the Iowa Policy Project, to the Iowa Utilities Board, February 25, 2014, in docket NOI-2014-0001
Full statement submitted to IUB is here

The Iowa Utilities Board must recognize that this docket has implications for confronting climate change. To look narrowly and make a decision based only on what is best for the stockholders of Alliant or MidAmerican Energy would be the wrong choice. Climate change is a reality and the investor-owned utility companies must adjust their business model to contend with it. The question for the Board should be, “How does the state of Iowa procure more distributed electric generation installed in a way that gives the utilities a way to be part of the solution?”

First, there is no scientific debate about whether the climate is changing and whether humans are the main cause. In October 2013, 155 science and research staff at 36 Iowa colleges and universities signed a statement on the reality of climate change. As one of the signers I would like to submit the first paragraph and the last sentence of that statement:

“Our state has long held a proud tradition of helping to ‘feed the world.’ Our ability to do so is now increasingly threatened by rising greenhouse gas emissions and resulting climate change. Our climate has disrupted agricultural production profoundly during the past two years and is projected to become even more harmful in the coming decades as our climate continues to warm and change.”

Rather than being a vague threat lurking somewhere on the horizon, scientists from around the globe confidently stated in the latest Intergovernmental Panel on Climate Change report that temperatures and rainfall patterns are shifting due to additions humans have made to the atmosphere by burning coal and oil. We who work in this area are alarmed at the lack of action to reduce the pollutants that are the root of this problem.

Children born today will spend their lives under climates that are different from those any generation of Americans has experienced. The same will be true for their children, and their grandchildren. Agriculture, the lifeblood of Iowa, is being threatened with more frequent droughts and floods. Switching to modern renewable power sources and becoming more efficient in how we use energy cannot roll back the clock, but it can help make these climate changes less extreme.

I applaud the Board for looking deeply into distributed electric generation such as wind and solar power. It is the solution to the biggest environmental problem in modern times.

IPP-osterberg-75David Osterberg is the founding director of the Iowa Policy Project, and a Professor in the Department of Occupational and Environmental Health in the University of Iowa College of Public Health.

More information:

Information on January 2014 Notice of Inquiry by Iowa Utilities Board

Previous IPP publications:

IUB Inquiry is Opportunity to Find Acts in Cap-and-Trade Debate — July 2009
News release
IUB Notice of Inquiry

Proposals in Congress Do Provide Relief to Consumers — June 2009
Backgrounder
News release

Electric Rate Reform Could Spur Energy Savings, Help Low-Income IowansJune 2009
Full report
Executive summary

News release