Alliant Energy’s residential customers recently received a “Notice of Electric Bill Changes.” What Alliant didn’t tell its customers is that the company entered into a settlement agreement that significantly reduced its requested rate increase and required the company to abide by several measures designed to rein in Alliant’s very high costs over the next five years.
“Though it didn’t go nearly far enough towards reining in Alliant, the CEDI Coalition had a significant impact on the settlement agreement in this rate case,” said Andrew Johnson, executive director of the Clean Energy Districts of Iowa (CEDI). “We formed a coalition that consisted of the 13 energy districts in Iowa and 50 communities in Alliant’s service territory, including the City of Decorah, which was the first to join the coalition.”
Impacts on Residential Customers
Alliant’s residential customers in Iowa pay more for their electricity than almost all other households in the state. In addition, Alliant households also pay some of the highest rates in the Midwest, according to the US. Energy Information Administration. (See attached tables) As a result, the Iowa Utilities Commission (IUC) protected residential customers by only approving a 6% cost increase cap for the Residential class. Individual customer bills may be higher or lower, however.
The first thing to note is that the fixed monthly service charge for residential customers is increasing by 19% from $13/month to $15.50/month. Second, higher-usage residential customers are facing significant energy charge increases due to major changes in rate structures and seasonal rates. According to Alliant, the average residential customer uses 738 kilowatt hours (kWh) of electricity per month, which works out to 8,856 kWh per year. Customers who use significantly more than this monthly average in the winter or the summer could face monthly bill increases above 6%.
The winter rate structure is dramatically changed by Alliant’s decision to eliminate “declining block rates,” which provided lower cost energy for higher energy users. Now, households that use electricity for home heating may experience significant rate shock during winter months.
Summer residential rates have not included declining block rates, but are experiencing a nearly 15% increase in base rates across the board. The following tables, not included in Alliant’s notice, illustrate the potential impact due to increases in base rates, which represent about 66%
of residential customer bills.
| Residential Class
Rate 400 |
Previous Winter
Base Rate Cents/kWh |
New
Winter Base Rate Cents/kWh |
Winter Base Rate Increase | ||
| First 16.438 kWh/Day or first 500 kWh/Mo. | 9.969 | 9.992 | 0.23% | ||
| Next 23.014 kWh/Day or next 700 kWh/Mo. | 7.721 | 9.992 | 29.41% | ||
| Over 39.452 kWh/Day or over 1,200 kWh/Mo. | 3.932 | 9.992 | 154.12% | ||
| Residential Class
Rate 400 |
Previous Summer
Base Rate Cents/kWh |
New Summer
Base Rate Cents/kWh |
Summer Base Rate
Increase |
||
| First 16.438 kWh/Day or first 500 kWh/Mo. | 11.685 | 13.398 | 14.66% | ||
| Next 23.014 kWh/Day or next 700 kWh/Mo. | 11.685 | 13.398 | 14.66% | ||
| Over 39.452 kWh/Day or over 1,200 kWh/Mo. | 11.685 | 13.398 | 14.66% | ||
These energy charge cost increases will be offset to some extent by a one month reduction in the length of the summer billing period, the annual pass-through of renewable energy tax credits from Alliant facilities, and a one-time pass-through of tax credits from November 2024 through
October 2025. The cost for transmission service will increase, however.
In summary, most residential ratepayers should experience an average bill increase of less than 6%. Still, residential customers who live in poorly insulated homes with older and less efficient air conditioners, and/or electric resistance heating are the most likely to experience bill
increases over 6%.
Impacts on General Service Customers
Alliant’s other customers are facing much larger monthly bill increases, which the IUC has capped at 15% on average for each customer class.
The General Service class includes Main Street businesses, churches, other non-profits, and many schools and municipal government buildings. The monthly service charge for these customers will increase 15% from $20/month to $23/month. In addition, they face significantly increased winter and summer energy charges.
According to Alliant, the average General Service customer uses 1,996 kWh per month or 23,952 kWh per year. Customers who use more than this average in the winter or the summer could face monthly bill increases above 15%, thanks in large part to the elimination of the declining block rate in both seasonal rate structures. The following tables, not included in Alliant’s notice, illustrate the potential impact due to increases in base rates, which represent about 70% of General Service customer bills.
| General Service Class
Rate 600 |
Previous Winter
Base Rate Cents/kWh |
New
Winter Base Rate Cents/kWh |
Winter Base Rate Increase | ||
| First 39.452 kWh/Day or first 1,200 kWh/Mo. | 9.875 | 12.041 | 21.93% | ||
| Over 39.452 kWh/Day or over 1,200 kWh/Mo. | 7.236 | 12.041 | 66.40% | ||
| General Service Class
Rate 600 |
Previous Summer
Base Rate Cents/kWh |
New Summer
Base Rate Cents/kWh |
Summer Base Rate Increase | ||
| First 39.452 kWh/Day or first 1,200 kWh/Mo. | 11.916 | 16.513 | 38.58% | ||
| Over 39.452 kWh/Day or over 1,200 kWh/Mo. | 9.949 | 16.513 | 65.98% | ||
These energy charge cost increases will be significantly offset by a one month reduction in the length of the summer billing period, the annual pass-through of renewable energy tax credits from Alliant facilities, a one-time pass-through of tax credits from November 2024 through October 2025, and a reduction in the cost for transmission.
In summary, the average General Service customer should experience an average bill increase of less than 15%, but customers with poorly sealed and insulated buildings and/or old and inefficient HVAC systems and those using electricity for heating are more likely to experience bill increases over 15%.
Options to Reduce Costs
Residential and General Service customers may be able to reduce their costs by opting to take service under a different rate option. For more information about customer rates and the parts of your bill, visit alliantenergy.com/iowarates or call 1-800-ALLIANT (800-255-4268) to see if it would
make sense to switch to a time-of-day rate plan. Residential customers can explore these options online at this Alliant website. It is not clear, however, whether customers with solar can use the time-of-day rate options.
“I’m not crazy about a 15% cost increase,” said Decorah Mayor, Lorraine Borowski, “but it was supposed to be a lot worse. I’m grateful that the CEDI Coalition went to bat for the over 3,000 residential households in Decorah as well as all of our businesses and non-profits.”
One of Decorah’s largest electricity consumers is Luther College, which has a lot of renewable generation capacity on campus. One of the issues that was not resolved by the settlement agreement was Alliant’s proposal to impose new and expensive charges on customers like Luther. By Luther’s initial calculations, these terms would have increased Luther’s approximately $1 million in annual electricity costs by over 40%.
“I am so glad that the CEDI Coalition helped to persuade the Iowa Utilities Commission not to approve Alliant’s proposed rate design scheme,” said Luther College President, Jenifer K. Ward. “If our costs only increase by the 15% class cost cap, the CEDI Coalition will have helped us save hundreds of thousands of dollars every year for at least the next five years. That’s a lot more money we can use to offer financial aid to our students and to pay our valuable employees.”
Visit the CEDI Coalition’s webpage to learn more about the CEDI Coalition and the rate case as a whole. For CEDI’s report on the Utility Commission’s final ruling and our response, see this post.
The three tables on the following pages were generated recently by Iowa Business for Clean Energy from select utility data reported by the U.S. Energy Information Administration.
Additional Coverage
This editorial and related coverage also appears with:
- DecorahNews.com “UPDATE: Iowa Utility Regulators Cap Alliant’s Rate Increase, Saving Millions for Residents and Businesses”
(November 8, 2024) - Decorah Leader “Alliant Energy raises Iowa electricity rates up to 15 percent for downtown businesses, others”
(November 12, 2024)
Posted: November 20, 2024
