Interstate Power Rate Case InfoMEMORANDUM
May 14, 2003
TO:The Honorable Mayor and City Council Members
FROM:Michael C. Van Milligen, City Manager
SUBJECT:Conclusion of Interstate Power Rate Case: Costs and Benefits
Economic Development Director Bill Baum is transmitting a report to the City Council on
the outcome of the Interstate Power Rate Case, which reports that Interstate Power's
rate request for $82 million was successfully lowered to $26 million. This will result in
an increase in residential rates in Dubuque of approximately 9%, as compared to the
16.49% increase that would have been in effect had Interstate received the amount
originally requested. With participation from five other communities, the City of
Dubuque's cost for the litigation was held to the originally anticipated $40,000.
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
William J. Baum, Economic Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
May 8, 2003
TO:Michael Van Milligen, City Manager
FROM:William J. Baum, Economic Development Director
SUBJECT:Conclusion of Interstate Power Rate Case: Costs and Benefits
BACKGROUND
Last year the City Council authorized hiring the Ahlers law firm to represent the City's
interests in an Interstate Power (IP) proposed rate increase and equalization of electric
rates before the Iowa Utilities Board. Rate equalization was the big issue. If allowed,
IP's proposed 9 percent increase in rates, combined with equalization among all
merged zones, our rates would have increased as much as 29% for residential users.
The estimated cost discussed with the Ahlers firm at the time the City made a decision
to move forward was $40,000. Unfortunately, because of the length of the case, and
the complications of equalization, the cost of our representation with Ahlers and the
consultant (Michael Sheehan) hired by them is now over $100,000.
Fortunately, the City's of Mason City, Clinton, Washington, Newton, and Grinnell agreed
to join us in the battle against equalization. Therefore, our share (40%) of the cost is
very close to the original estimate of $40,000.
BENEFITS TO DUBUQUE CITIZENS AND COMPANIES
The Iowa Utilities Board has issued a Final Decision and Order on Interstate Power's
request for an increase of $82 Million.
· The Board granted an estimated $26 Million increase, or about 2.9 3ercent,
significantly less than the $82 Million requested by
· The Board moved toward rate equalization, but tempered the move m order to
avoid unreasonable financial consequences to our citizens.
- As a result of this increase, residential rates in Dubuque will rise approximately
9% over what they were prior to the filing. (6.17% in permanent in addition to the
2.67% temporary increase)
· This compares to a 16.49% increase that would have been in effect if this rate
increase included full equalization.
Enclosed are two schedules contained in the decision. Schedule G represents
the increase allowed by the Board. Schedule H estimates our increases if full
equalization would have occurred.
Assuming the national average residential use is 750 KWH per month, the
estimated average residential bill in Dubuque prior to the temporary or
permanent increase was $62 per month. At the new rate, the estimated average
will be $67.50 per month, a 9% increase. If full equalization would have been
implemented, the average residential user would be paying an estimated $72.25
per month, a 16.49% increase. The difference is approximately $4.75 per month
per household. The City has an estimated 23,800 households, according to the
2000 census. Therefore, the decision by the Iowa Utilities Board not to force full
equalization saved our residential households $113,050 per month, or
$1,356,600 per year.
Impacts on businesses under full equalization occurred would also have been
substantial: the estimated increase is 7.05% compared to the 12.81% under
equalization.
Our mission at the beginning of the case was not to deny IP a fair increase in rates, but
to protect our residents from even higher rates because of equalization. My opinion is
that by working together with other communities on this issue, we were successful, and
the $40,000 investment by the City of Dubuque was very beneficial to our residents.
F:\USERS\WBaum\Memos to Mike -- GeneraltAIliant rate case costbenefit.doc
DOCKET NOS. RPU-02-3 / RPU-02-8
SCHEDULE G
ESTIMATED INCREASES BY CLASS ZONE
Beg.
Beginning Ratio
Total Rate To
Customer Revenue Class
Class Zones $ per kWh Average
Residential
lES - N $0.1017 1.17
lES - S $0.0617 0.71
IPC $0.0827. 0.95
$0.0871 1.00
FaiTh
lES - N $0.0918 1.02
IPC $0.0868 0.96
$0.0901 1.00
Gen Service
lES - N $0.0910 1.12
lES - S $0.0660 0.81
lES - SE $0.0800 0.99
IPC ~- $0.0656 0.8t
IPC (OPA)~ $0.0566 0.70
$0.0810 1.00
lES - N $0.0490 1.08
lES - S $0.0385 0.85
IPC '~- $0.0450 0.99
$0.0453 1.00
Bulk Power
IPC $0.0371
Liqhtinq
lES - N $0.1447 1.05
lES - S $0.1173 0.85
IPC $0.1466 1.06
$0.1381 1.00
TOTAl-
Estimated Estimated Estimated Final
Additional Total Final Ratio
Temp. Final Final Total Rate To
Percent Percent Percent Revenue Class
Chan,qe Chan.qe Chan,qe ~ per kWh Avem,~
0.00 % 2.68 % - 2.68 % $0.1044 1.12
8.00 % 8.00 % 16.64 % $0.0719 0.77
2.67 % 6.17 % 9.00 % $0.0901 0.97
$0.0928 1.00
0.00 % 0.00 % 0.00 % $0.0918 1.00
6.13 % 0.00 % 6.13 % $0.0921 1.00
$0.0919 1.00
0.00 % ( 5.00)% ( 5.00)% $0.0864 1.08
6.39 % 0.00 % 6.39 % $0.0702 0.88
0.00 % 0.00 % 0.00 % $0.080o 1.oo
7.05 % 0.00 % 7.05 % $0.0702 0.88
1.63 % 6.27 % 8.00 % $0.0611 0.76
$0.0800 1.00
0.00% ( 1.71)% ( 1.71)% $0.0481 1.05
6.70 % 2.16 % 9.00 % $0.0419 0.91
0.00 % 2.34 % 2.34 % $0.0460 1
$0.0460 1.00
1.30 % 0.00 % 1.30 % $0.0376
1.06 % 6.48 % 7.61% $0.1557 1.03
8.00 % 6.48 % 15.00 % $0.1349 0.90
0.00 % 6.48 % 6.48 % $0.1561 1.04
$0.1505 1.00
1.80 % 1.09% 2.91%
Other PubLic Authorities
DOCKET NOS. RPU-02-3 / RPU-02-8
SCHEDULE H
ESTIMATED INCREASES BY. CLASS ZONE - UNDER FULL EQUAUZATION
Beg. Estimated Estimated
Beginning Ratio Additional Total
Total Rate To Temp. Final Final
Customer Revenue Class Percent Percent Percent
Class Zones $ per kWh.. Avera.q~ Chan.qe Chan.qe Chanqe
Estimated Final
Final Ratio
Total Rate To
Revenue Class
$ per kWh Averacle
Residential
lES- N $0.1017 1.17 0.00 % ( 5.28)% ( 5.28)% $0.0963
lES- S $0.0617 0.71 8.00 % 44.60 % 56.17 % $0.0963
IPC $0.0827. 0.95 2.67 % 13.46 % 16.49 % $0.0963
$0.0871 1.00 $0.0963
1.00
1.00
1.00
1.00
Farm
lES - N $0.0918 1.02 0.00 % 0.12 % 0.12 % $0.0919
IPC ~0.0868 0.96 6.13 % ( 0.23)% 5.89 % $0.0919
$0.0901 1.00 $0.0919
1.00
1.00
1.00
Gen Service
lES - N $0.0910 1.12 0.00 % (18.65)% (18.65)% $0.0740 1.00
lES - S $0.0660 0.81 6.39 % 5.38 % 12.11% $0.0740 1.00
lES- SE $0.0800 0.99 0.00 % ( 7.50)% ( 7.50)% $0.0740 .1.00
IPC $0.0656 0.81 7.05 % 5.38 % 12.81% $0.0740 1.00
IPC (OPA)~ ~;0.0566 0.70 1.63 % 28.66 % 30.76 % $0.0740 1.00
$0.0810 1.00 $0.0740 1.00
~ 1.00
IES-N $0.0490 1.08 0.00% ( 6.16)% ( 6.16)% $0.0460
lES - S $0.0385 0.85 6.70 % 11.90 % 19.40 % $0.0460 1.00
IPC ~0.0450 0.99, 0.00 % 2.20 % 2.20 % $0.0460 1,00
$0.04.53 1.00 $0.0460 1.00
Bulk Powe~
IPC $0.0371 1.30 % ( 3.40)% ( 2.14)% $0.0363
~ 1.00
lES - N $0.1447 1.05 1.06 % 12.04 % 13.23 % $0.1638
lES - S $0.1173 0.85 8.00 % 29.29 % 39.63 % $0.1638 1.00
IPC ~0.1466 1.06 0.00 % 11.77 % 11.77 % $0.1638 1.00
$0.1381 1.00 $0.1638 1.00
TOTAL
1.80 % 1.09 % 2.91%
Other Public Authorities