Cedar Rapids, Iowa-based Interstate Power and Light Co. (IPL), a subsidiary of Alliant Energy Corp., plans to file a proposal with the Iowa Utilities Board (IUB) to increase its Iowa retail electric rates.
IPL's request seeks to increase annual electric revenues by approximately $163 million, or 14%. The requested electric-revenue-requirement increase is primarily driven by the impacts of higher transmission service and recovery of costs incurred for Lansing Generating Station Unit 4 environmental controls equipment, the Whispering Willow – East wind project and capital investments to improve reliability.
IPL anticipates implementing interim electric rates beginning March 20. The interim rates are expected to increase annual electric revenues by approximately $119 million, or 10%. IPL has relied on past precedent to establish a return on equity for interim rates of 10.5%.
The capital structure in interim rates includes 42.9% long-term debt, 7.6% preferred stock and 49.5% common equity. The weighted average cost of capital is 9.63% for the Emery Generating Station, 9.37% for Whispering Willow – East and 8.77% for all other investments.
Interim rates will include the impact of increased transmission service rates from ITC-Midwest that went into effect in January. IPL is proposing – commencing with final rates – to implement an automatic adjustment clause for transmission service costs different than those in the final rate level.Â
Interim rates will remain in effect until the IUB issues a decision on the company's electric-rate request, expected in the first quarter of 2011. If the final electric revenue requirements approved by the IUB are lower than those reflected in the interim rates, IPL will grant refunds equal to the difference between the interim and final revenue requirement levels,, plus interest.
SOURCE: Alliant Energy Corp. Â