Minnesota attorney general files testimony in opposition of rate hike

Published 2:09 pm Tuesday, December 7, 2010

Swanson calls proposed increase “rate shock”

Minnesota Attorney General Lori Swanson on Tuesday issued testimony to the Minnesota Public Utilities Commission in opposition of Alliant Energy’s proposed $15 million rate increase, which would raise electricity rates between 22 and 23 percent.

Calling the increase “rate shock,” Swanson said in a news release that the Public Utilities Commission should deny the company’s large rate hike request because it constitutes too extreme of a swing.

Lori Swanson

The company, under Alliant’s subsidiary name Interstate Power & Light, filed its request in May with the Minnesota Public Utilities Commission to increase electric rates with customers in its Minnesota service area by 23 percent for residential customers and 18.4 percent for small business owners.

“Families and small businesses are struggling to make ends meet in this troubled economy, and this is an enormous whale of a rate increase request,” Swanson said. “I’m asking the Minnesota Public Utilities Commission to closely examine this request and make the utility prove up every penny before it is allowed to raise rates.”

According to the release, the rate hike request comes at a time when many Minnesotans and small businesses are financially squeezed in the economic downturn.

Under the proposed increase, average residential customers would be hit with an increase of approximately $16 on their monthly bill, including a hike in the monthly residential customer charge from $6.50 to $10, according to the release. She said the company should not be allowed to raise its monthly residential fee.

Swanson said the company is asking Minnesota customers to bear too much of the brunt of the requested rate hike.

“While only 8 percent of the company’s customers live in Minnesota, Minnesota customers are being asked to shoulder a disproportionate 20 percent of the rate increase,” she said. “If the Public Utilities Commission were to allow any increase, it should be fairly distributed and not fall more harshly on the backs of Minnesotans.”

She called the magnitude of the company’s proposed rate increase “untenable” and said it must be rejected. She noted there is precedent for such a denial. In 1996, the Public Utilities Commission turned down a 21 percent rate increase requested by IPL because it constituted “rate shock.”

She also pointed out that state law provides that the Public Utilities Commission “must consider ability to pay as a factor in setting utility rates.”

Swanson objected the company’s request that the Public Utilities Commission allow it to recover $1.7 million over five years for costs spent on the company’s pursuit of a since-abandoned proposal to build a coal-fired plant in Marshalltown, Iowa. She said the plant was never built and never provided any benefits to Minnesota ratepayers.

Swanson was also critical of IPL’s sale of its transmission assets to ITC-Midwest several years ago.

Scott Drzycimski, customer communications manager with Alliant Energy, said the company believes the decision was the best in the long run for customers.

Swanson encouraged customers who are worried about the rate increase to attend and participate in one of the upcoming public hearings before Administrative Law Judge Bruce Johnson. Anyone who wishes to provide comments at the hearings or explain how a rate increase would impact them will be given the opportunity to speak.

She said it is important customers let the Public Utilities Commission know the impact because in 1996, when the commission turned down another rate increase by IPL, it did so in part because of the substantial number of consumers who attested to the financial hardship the increase would impose.

Drzycimski said Swanson’s filing is a part of the natural process for a rate case.

He said Alliant Energy will review her testimony and then file rebuttal testimony to the Public Utilities Commission.

All of the testimony is posted on the Public Utilities Commission website at www.puc.state.mn.us and is available for review.

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