South Dakota PUC handled two rate increase requests from MidAmerican Energy
Company’s first electric rate increase in two decades approved; natural gas rates to rise after 11 years
PIERRE, S.D. – MidAmerican Energy Co. received the OK today from the South Dakota Public Utilities Commission to implement rate increases for natural gas and electric customers. The company’s last electric rate increase request was approved in 1995; the most recent natural gas hike occurred in 2004.
In separate decisions affecting both types of MidAmerican Energy customers–natural gas and electric–the PUC accepted settlement agreements offered by the company and PUC staff that detailed lower-than-requested rate increases. The decisions made by Commissioners Chris Nelson, Kristie Fiegen and Gary Hanson took place at an ad hoc meeting of the PUC held June 16 in Pierre.
MidAmerican’s 88,000 natural gas customers in South Dakota will see a bump on their bill beginning July 1, 2015. On average, customers’ distribution delivery rates will increase by about 5.67 percent; the company’s request was 10.7 percent.
Improvements in pipe, including retiring all vintage cast iron gas pipe systems and replacing older steel and plastic pipes, were key factors in the company’s request for additional revenue. Other investment in facilities and equipment, and inflation also played a part.
MidAmerican’s electric customers will experience a rate change via a two-step process. Effective July 13, 2015, rates will be implemented resulting in an average increase of 5.66 percent. However, customers will see a reduction on their bills associated with the costs related to a generation project and a transmission project that will be placed into service later this year. This reduction will be effective from July 13 until the time both projects are in service no later than Dec. 31, 2015. MidAmerican and PUC staff explained in documents filed with the commission that such a plan serves the best interest of rate payers by eliminating the need for the company to apply for another, immediate rate increase.
“The fact that you have not been here asking for a rate increase in the last 20 years is commendable,” PUC Chairman Nelson told MidAmerican Energy officials at the meeting. “The company and staff seemed to have resolved issues very well. It is obvious you are making some smart business decisions that are beneficial to ratepayers financially and good for the company,” he commented.
“I appreciate the unique two-step approach taken with the electric rate request,” Vice Chairman Fiegen said. “It saves the customer money and saves the company and staff time. Electric rates are increasing across the nation. I appreciate the efforts to keep this increase as low as possible,” she concluded.
In the request filed with the PUC in August 2014, MidAmerican Energy asked to increase electric rates to raise approximately $1.6 million in additional annual revenues, or approximately 13.8 percent, from its 4,500 electric customers in South Dakota. The PUC’s decision on the final rate increase allows for annual additional revenue of $648,471, or approximately 5.66 percent. During the time the reduction is in effect, the allowed rate increase is only $293,903.
Prior to Tuesday’s vote, MidAmerican representatives and PUC staff members fielded questions from commissioners ranging from the cost and benefit of the company building new wind energy facilities to the content of customer notices explaining the rate changes.
Commission Hanson noted the voluminous amount of data that was shared by the company and analyzed by the PUC staff for both cases. “It is phenomenal to consider the reams and reams of information that have been pored over to get us to this decision today,” he stated. “I am appreciative and impressed with the diligence of the PUC staff and the civility of the company throughout the process. It’s good to know we have good folks working in the utility business,” Hanson said.
MidAmerican implemented interim natural gas and electric rates on Feb. 1, 2015. Because the approved rate increases are lower than the interim rates, the company will credit the difference plus interest to customers on bills no later than Sept. 1, 2015. Interim rates are allowed by state law. The PUC approved the interim rate refund plans.
The company agreed to not ask the commission for permission to raise natural gas or electric base rates before February 2018.
The PUC’s rate increase process for both MidAmerican Energy dockets included an extensive analysis of the requests by a staff team comprised of an attorney and four utility analysts, assisted by rate consultants. Both requests were scrutinized by the PUC staff with individual elements negotiated with MidAmerican representatives until reaching resolutions described in the settlement agreements.
The full MidAmerican Energy rate increase request dockets can be viewed on the PUC’s website at www.puc.sd.gov, Commission Actions, Electric Dockets, 2014 Electric Dockets, EL14-072 – In the Matter of the Application of MidAmerican Energy Company for Authority to Increase its Electric Rates; and Natural Gas Dockets, 2014 Natural Gas Dockets, NG14-005 – In the Matter of the Application of MidAmerican Energy Company for Authority to Increase its Natural Gas Rates.