Public outcry seen at rate hike hearing

Published 9:35 am Friday, December 10, 2010

Tom Aller, president of Alliant Energy’s Interstate Power & Light, speaks Thursday during a public hearing at Riverland Community College regarding a proposed 22 percent increase in electricity rates. -- Sarah Stultz/Albert Lea Tribune

Feelings of question and opposition to a proposed 22 percent increase in Alliant Energy electricity rates took center stage Thursday night during a more than two-hour public hearing at Riverland Community College regarding the proposal.

Under the direction of Administrative Law Judge Bruce Johnson with the Minnesota Office of Administrative Hearings, an overwhelming majority of the residents and business owners who spoke voiced their opinions against the increase, stating it would be an undue burden that would have a ripple effect on multiple segments in the community.

“I’m just very concerned that this increase is more than I feel we can bear,” said one speaker, Thomas Newell with Minnesota Freezer Warehouse Co.

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The lecture room where the hearing was held was filled to its capacity of 250, and there were numerous other people listening in from the hallway. It was the last of three public hearings scheduled as part of the rate case.

Representatives from the Minnesota Attorney General’s Office, the Minnesota Office of Energy Security, the city of Albert Lea and other Freeborn County cities were also present in opposition to the increase.

In favor of the increase was Tom Aller, president of Alliant Energy’s subsidiary Interstate Power & Light, along with several other Alliant Energy employees. Interstate Power & Light provides power to much of Albert Lea, though the Alliant brand is all over its bills.

Johnson will ultimately write a report of facts, conclusion and a recommendation from the testimony, evidence and trial in the case and give it to the Minnesota Public Utilities Commission. The commission will make the final decision on whether to implement the proposal or any variation of it.

Aller said IPL filed a request to change the rates with the Public Utilities Commission in May, and a collection of interim rates began in July and August. The interim rate increases are subject to refund depending on the results of the case.

The request would increase the company’s annual revenues by 22 percent, or $15 million. The interim rate increases were about a 20.1 percent increase, though the impact of the proposed change will vary depending on customer class.

He said it’s been five years since Alliant Energy has filed a request to adjust rates in Minnesota.

Aller noted that the company has invested more than $1 billion over the past five years to expand renewable energy, reduce emissions and to enhance electric reliability for the benefit of its Minnesota customers. He also mentioned the impact of the June tornadoes, stating the company replaced nearly 200 poles and 150,000 feet of new wire.

He said the company has attempted to manage its costs, just like any resident would, but at the same time, it is required to provide safe, reliable power.

He added he thinks reliable power is key to attracting jobs.

Minnesota Attorney General’s Office

Karen Olson, deputy attorney general with the Minnesota Attorney General Lori Swanson’s Office, said the attorney general believes Alliant Energy’s request is unprecedented and noted it will hurt small business and utility rate payers who are already struggling to pay their bills.

The average residential increase would be $16 a month, if approved.

She said the Public Utilities Commission must consider rate payers’ ability to pay the rates when making a decision.

Olson called the proposal “too extreme,” and said it constitutes “rate shock.”

She also referenced a since-abandoned proposal by Alliant Energy to build a coal-fired plant in Marshalltown, Iowa. She said the plant was never built and never provided any benefits to Minnesota ratepayers.

She noted the Attorney General’s Office will continue to investigate the case and is expected to file more testimony. She encouraged people to make their positions known.

Office of Energy Security

Mark Johnson, a financial analyst with the Office of Energy Security of the Minnesota Department of Commerce, said after his office investigated the proposal, he is recommending that nearly half the proposal — or $6.8 million per year — be rejected.

Johnson said it is the Office of Energy Security’s goal to make sure customers pay only for reasonable costs of providing service, while preserving a company’s financial viability so it can provide safe and reliable electric service.

He noted the recommendation was not final; however, as there continues to be questions about the proposal.

Residents and business owners

Connie Thompson, owner of LET Energy Systems in downtown Albert Lea, who lives in Glenville, said she cannot see where a 22 percent increase is fair.

Thompson said small businesses can’t afford it right now with the economy, but if the rates increase, the city will have to raise its taxes or water rates, and so on, to make up for the difference.

“You’re not just talking about one thing here,” she said. “You’re talking about lots of increases coming down the road.”

She noted she felt sorry for many people in the community who could not afford this.

Albert Lea-Freeborn County Chamber of Commerce Executive Director Randy Kehr talked about the effect of the increase on businesses and nonprofit organizations.

He said in this economic environment, small businesses would be faced with what appears to be an “untenable” choice under a permanent rate increase: whether to pass the increase onto the customer or to absorb the increase.

Absorbing the increase might mean cutting customer service or even moving the business to a non-Alliant facility, he noted.

Several senior citizens talked about the effect a rate increase would have on people who are living on Social Security.

John M. Lang, a former employee of IPL and Alliant Energy, said he has watched several things happening with the company that he does not agree with. He also talked about how there are several companies in town that have the capability of pulling out their businesses if the rate increase became permanent.

“We’ve lost enough businesses,” Lang said. “We cannot afford to lose more businesses or jobs.”

Second Ward Councilor Larry Baker and Albert Lea Mayor Vern Rasmussen discussed the $240,000 to $250,000 increase to the city that the proposed increase would cause.

Both said the city would have to make up for that money somewhere: either by raising taxes or by cutting services.

“If this happens, it’d probably be a combination of both,” Baker said, noting that there are many people in the community who are upset about the proposal.

Rasmussen said reducing services would reduce the quality of life for the city’s residents.

Because of the effect the rate increase would have on Albert Lea and its residents, the city has formally stepped in to intervene in the case. Represented by lawyers, the city will be a part of later proceedings as well.

Newell, of Minnesota Freezer Warehouse Co., described the proposed increase as “onerous” and “horrendous.”

He said he’s currently closing a Minnesota Freezer Warehouse facility in Worthington over the same reasons.

“I’m in one of those positions where I say, ‘Here we go again.’”

John Harrington, of Bridon Cordage, said the Albert Lea facility is only running at 65 percent production because of the interim rates already in place.

He said if the company were to expand its market or add another line, it would be cheaper to do so somewhere else.

“This is not a small increase,” Harrington said. “This is not an increase that cannot be absorbed.”

Dan Dorman, executive director of the Albert Lea Economic Development Agency, said the last three industrial plants that have been built in Albert Lea were in Freeborn-Mower service territory.

If companies are considering Albert Lea, they often ask whether they would be in Alliant or Freeborn-Mower territory. And many times they reject the Alliant Energy locations because of the increased electricity rates there.

Paul Overgaard, representing the Youth For Christ organization in Albert Lea, talked about the impact the proposed rate increase would have on nonprofit organizations.

“These increases kind of reverberate down through the economy,” Overgaard said. “They don’t just impact the original rate payer.”

Steve Lund, representing the Albert Lea Area Schools, said in the last several years, the school district has taken major strides to be more energy efficient. Staff have been able to reduce electric use by 30 percent.

However, the proposed rates would have an annual impact on the schools of $75,000.

Lund said everyone is being asked to tighten their belts, and he thinks Alliant needs to do their share.

A number of other people also voiced concern over not being able to choose another electric company if they wanted to because Alliant Energy is the only service provider in many areas.

Aller said if people in the state are interested in having a choice for an electricity provider, that’s a function of the state Legislature. Right now with the rules, there are regulated monopolies, he said.

Albert Lea resident Al Arends, who served on the board of Alliant Energy and Interstate Power, said he can see the issue from both sides. He talked about the renewable energy standard in place and noted that Alliant Energy is dedicated to bringing in renewable sources.

He also noted that wind energy is more expensive than coal.

“If we’re going to become a green society, we’re going to have to pay the price for that, and that ain’t fun,” Arends said.

He also pointed out the amount of taxes Alliant Energy pays to the city and Freeborn County.

“I can see where they’re coming from, but I know how hard we hurt, too,” Arends said.

Didn’t make it to the hearing?

According to the Office of Administrative Hearings website, people can still submit written comments through 4:30 p.m. Jan. 11, 2011. Public comments should include the docket number (OAH 4-2500-21392-2 and MPUC E-001/GR-10-276) and be addressed to Bruce Johnson, Administrative Law Judge, 600 N. Robert St., P.O. Box 64620, Saint Paul MN 55164-0620. Comments can be e-mailed to or faxed to 651-361-7936.
To send in a comment to the Minnesota Public Utilities Commission, go to and click on “Interstate Power & Light Rate Case.” The same deadline applies.