August 14, 2008

Rate Hike Hearing Sparks Little Heat


What will it cost? On June 2, 2008, Aquila, now Black Hills Energy, filed a proposal for a permanent annual revenue increase of approximately $13.56 million, or 7.6 percent, which if granted would raise monthly bills of residential customers an average of 10.3 percent. Average monthly increases include: 3 Residential (based on 791 therms): $7.40 3 Commercial (based on 3,303 therms): $7.93 Those customers who think they might have difficulty paying their monthly gas bill should contact the company to discuss alternative payment plans. The board plans to reach a conclusion on the proposal by July 2, 2009. A hearing regarding the filed proposal will be held March 10, 2009. Written comments may be mailed to the Iowa Utilities Board, Executive Secretary, docket NO. RPU-08-3, 350 Maple Street, Des Moines, Iowa 50319-0069. For more information, visit News You can use

The room was silent as Darrell Hanson waited patiently.

Hanson, a member of the Iowa Utilities Board, said he wanted to give residents every opportunity possible to comment on a proposed rate increase by Black Hills Energy, the company that acquired Aquila Inc. last month.

But if Dubuque-area residents are distressed about the natural gas provider's proposed 10 percent rate hike, they weren't showing it in public - at least in a hearing format devoted to ratepayer opinion.

Only three consumers attended the public comment hearing Tuesday at the NICC Town Clock Center for Professional Development, and of those, just one brought questions to the floor.

Mary Sand questioned how the public will be assured that money from the rate increase is used appropriately, how the company's additional work force and safety measures benefit consumers and whether state officials would continue to watch for ways to lower rates in the future.

Black Hills'rate hike would raise the bills of average residential customers by about $7.40 per month, or about 10.3 percent.

After the hearing, Sand said she felt compelled to comment on a proposed increase that is "significant."

"With the way the economy is today, I just want to ensure that (the utility is) planning on spending the money they get through the rate increase responsibly, that it's used for what they say it's going to be used for," she said.

The state studies the rates every year and has the ability to file requests with the board for rate changes, according to Ron Polle, with the Office of Consumer Advocate in Des Moines. He added that a pile of customer complaints in one area also will spark some "digging" by the office.

Hanson said there are several possible theories why consumers didn't turn up: They are totally satisfied with their service and the proposed increase, they are not aware of the issue or they feel the proposal is already a done deal.

But Hanson said the case is far from being decided, and consumers still have time to comment on the issue.

"I think it's fair to say the utility doesn't get everything they want from the Iowa Utilities Board," said Hanson, who also suggested that coverage of the Olympic Games might have kept some people at home Tuesday.

In outlining their case, Black Hills Energy officials said the company has been impacted by nearly a decade of warmer temperatures than predicted in Iowa, a reduction in average use, a $25 million investment in the Iowa system in the last three years and inflationary costs.

Aquila experienced losses of

$2.5 million and $1.4 million in 2006 and 2007, according to Tracy Peterson, Black Hills'operating vice president for Iowa. Peterson stressed that the proposal has nothing to do with the Black Hills acquisition of Aquila and he told Sand that additional staff has largely been added in rural areas to cut down the response time to emergencies.

Black Hills officials emphasized that the cost of the gas is a direct pass-through in Iowa - meaning the company does not make any profit on it.

The gas price comprises between 70 and 80 percent of the bill, according to Peterson, so the approximate 10 percent increase would impact a smaller portion of the bill.

A temporary rate increase of 5.3 percent, which does not require pre-approval from the board, went into effect in mid-June. Customers will receive a refund plus interest for any overcollection if the board approves permanent rates that are less than the temporary rates.

Originally published by EILEEN MOZINSKI TH staff writer/[email protected]

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