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MidAmerican proposes rate increase for electricity customers

BY ALISON CRISSMAN | JUNE 25, 2013 5:00 AM

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Proposed electricity rate increases by MidAmerican Energy Co. may lead many Iowans to tighten their belts in the coming months.

MidAmerican has proposed an increase in its Iowa electric base rates that would total approximately $135.6 million over a three-year period, according to documents on the Iowa Utilities Board website. The hikes are contingent on approval by the board.

This equates to three $45.2 million increases, with one taking effect on Aug. 15, the next on Jan. 1, 2015, and the third on Jan. 1, 2016, according to the board’s website.

Across the state, MidAmerican provides electricity to 513,000 residential customers, 50,400 commercial customers, and 1,800 industrial customers, said Abby Bottenfield, a MidAmerican spokeswoman.

For the average residential customer, electricity bills would rise by approximately $2.73 (3.6 percent) in the first rate increase, approximately $2.75 (3.5 percent) during the second, and about $2.68 (3.3 percent) in the final increase for a total increase of about $8.16 after three years.

For one Iowa City business owner, the proposed rate increase would bring an unwanted rise in monthly bills.

Craig Carney, the owner of Racquet Master, 620 S. Dubuque St., said the proposed rate increases would affect his business, especially in the summer.

“I’m lucky that I have such a small shop so that my bills aren’t that high, but a 9 to 10 percent increase over the years is quite a bit,” he said. “It’s going to affect me because air conditioning costs more in the summer than heating in the winter.”

Bottenfield said the proposal is the result of unchanged rates for the past 18 years.

“Current electric rates are based on 1995 business-related expenses, so the company looked at its 2012 business-related expenses when determining the final amount [of rate increases],” she said.

MidAmerican has invested more than $5 billion in infrastructure improvements since 1995 to more efficiently generate and deliver electricity to customers, she said.

In addition to these improvements, she noted that the rising costs of daily operations, maintenance, labor, and evolving environmental regulations have contributed to the proposed rate increases.

Bottenfield said the drought of 2012 and the recent flooding in the area did not play a role in the proposed increases, but previous severe weather events were factored into the $5 billion figure.

To inform residents of the proposal, MidAmerican has held a series of meetings across the state. The first was held in Iowa City on June 13 and the next will be held in Sioux City tonight.

“All comments become part of a permanent record, and [the utilities board] takes this into consideration when considering approval,” she said.

Around Iowa City, reactions to the proposal seem to be mixed.

Iowa City resident Tyler Stutzman said he understood reasoning behind the proposed increase, citing the nearly 20-year period over the last set increases.

The rate increases would not necessarily force him to change his budget, he said, but it would likely make him more energy conscious.

“I don’t really foresee changing my budget, but I might just be more aware of turning lights off and efforts to conserve energy to keep bills low,” Stutzman said.

University of Iowa senior Acacia Roberts said she disagreed with the proposed rate increases.

“I try to conserve energy by unplugging things, so why should I have to pay more for people who use more?” she said.  “Based on my bill every month, I’m not using more electricity than last year.”

UI economics lecturer Patrick Barron said that while the proposed rate increase is likely justified, it would still be hard on Iowans.

“The dollar has depreciated quite a bit since then [1995], which means that if [MidAmerican is] getting rates from 18 years ago, in real terms, the energy company has been losing money,” he said.

“This will affect industry in Iowa because it will raise the costs of goods, in turn raising production costs, and companies that produce goods in Iowa will be more expensive.”

Barron also noted the proposed increase’s direct effect on families.

“For a family, they get their bill directly from the energy company, so they will see an increase in their cost of living and will likely have less money to spend on other things,” he said.


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