Rate increase discussed

A proposal that would raise the electric bills of an average homeowner by $8.16 a month over three years attracted little attention from the public when members of the Iowa Utilities Board came to Fort Dodge Tuesday evening to hear comments on it.

MidAmerican Energy requested the rate increase, its first since 1995, in May and the three-member board is tasked with approving or rejecting it. As part of that process, board Chairwoman Libby Jacobs and board member Nick Wagner came to the Best Western Starlite Village Inn & Suites, 1518 Third Ave. N.W., to hear what local residents had to say about it.

Six members of the public attended the hearing, and two of them spoke to the board members, representatives of MidAmerican Energy and officials from the state Office of the Consumer Advocate.

Thomas McAnally, of Fort Dodge, questioned the need for the rate increase. He said the company has had net income of about $300 million for the last three years. He added that the company has paid Greg Able, a founder and shareholder, millions in salaries and bonuses.

Bill Fehrman, the president and chief executive officer of MidAmerican Energy, said the company’s electric rates have remained the same since 1995, while expenses have increased.

”Our business is hugely capital intensive,” he said. ”We have to make a certain level to continue to get the capital we need.”

Regarding Able, Fehrman said ”His oversight and value to the company is extreme.”

The other member of the public who spoke during the hearing, Tom Weatherford, of Fort Dodge, didn’t address the rate increase. Instead, he asked questions about the fees customers pay for burying power lines along Fifth Avenue South and Kenyon Road. The cost of burying those lines has been passed onto the utility’s customers, adding about $3 to their monthly bills.

Power lines along First Avenue South between Veterans Bridge and 29th Street are to be placed underground this year, and the cost of doing that will be added to customers’ bills.

Jacobs said MidAmerican Energy is asking for a rate increase of $135.6 million. That increase would gradually increase the rates in three phases.

The utility is also asking for permission to implement the first phase as a temporary rate increase in August. Because of that temporary increase, residential bills will go up $2.73 a month starting with the bills customers will receive in September for electricity used in August.

The Iowa Utilities Board must rule on that temporary rate increase by Aug. 15, according to Jacobs.

The monthly electrical bills for residential customers would rise by another $2.75 in 2015.

In 2016, they would rise by $2.68 a month.

The utility is also asking for two adjustment clauses, which, if approved, would allow it to recover additional costs of energy production and transmission.

Fehrman said while the rates would be increasing, MidAmerican Energy would give its customers a small break by refunding $8.8 million collected to pay for a study of the possible use of nuclear power.

Dean Crist, a vice president of the utility, said it stopped collecting the surcharge for the nuclear power study on Monday. He said the refund, which must be approved by the Iowa Utilities Board, would reduce customers’ bills by about 1 percent.

Another rate adjustment for all MidAmerican Energy customers will come after the proposed increase is in place. That adjustment would reduce the average residential bill in Fort Dodge by 14 cents a month over 10 years as the utility consolidates its rate structure.

Because today’s

MidAmerican Energy includes part or all of three older utilities, its customers are in three rate groups. To get all the residential customers into one rate group, a change that will give some an increase and others a decrease will be enacted.

Fort Dodge, which is considered part of the eastern rate group with Davenport and Bettendorf, is part of an area in which a reduction is needed to help unify the rate groups.

Jacobs said the board must make a decision on the rate increase by March 1, 2014.