Alliant Reaches Deal To Recover Costs Tied To Its Clean Energy Transition As It Plans To Raise Rates

Alliant Energy has reached a deal with consumer advocacy and environmental groups to recover $85.7 million in expenses tied to its clean energy transition as the utility plans to raise electric and natural gas rates next year. The Madison-based utility said the settlement will help Alliant transition away from fossil fuels while providing affordable power and heat for customers.

Alliant’s energy utility in Wisconsin — Wisconsin Power and Light — reached a settlement with the Citizens Utility Board, Sierra Club, Wisconsin Paper Council, Clean Wisconsin, RENEW Wisconsin and the Wisconsin Industrial Energy Group. The proposed agreement was filed with the Wisconsin Public Service Commission on Thursday.

Alliant proposes to raise electric rates on average by 9 percent and increase natural gas rates by an average of 10 percent for residential customers in 2022. In 2023, electric rates would be held flat while the utility may pursue a limited increase in natural gas rates.

If approved by regulators, Alliant said the average residential customer can expect to pay about $8.50 more per month on their electric bills while natural gas customers would pay roughly $5 more per month next year.

“This really helps us achieve a good outcome for our customers when we think about our smart investments, creating that cleaner energy and more reliable future for our customers,” said David de Leon, president of Alliant’s utility in Wisconsin. “I know I’m really pleased with where we landed here with our stakeholders.”

The settlement allows revenues from residential electric customers to increase by $70 million while revenues from natural gas customers will go up by about $15 million next year. Alliant said it needs to raise revenues to help fund a more than $1 billion investment in 1,100 megawatts of solar in addition to recovering around $500 million in investments made in its Edgewater coal plant that’s set to be retired next year.

“Nobody ever likes to see an increase, but it’s good for this utility that increases had been prevented for much of the last decade,” said Tom Content, executive director of the Citizens Utility Board.

Including the proposed rate increases next year, the average electric bill for Alliant customers has gone up at a rate of less than 1.5 percent year-over-year during the last decade while natural gas customers have witnessed a drop in rates of about 1 percent each year.

Content said Alliant is also restructuring costs that will save customers money in the near-term as it retires the Edgewater coal plant.

“At a time when clearly the key steps in this transition are taking place where they’re doing the retirement of the coal and the additions of the solar, that was a really good outcome from our perspective,” said Content. “It effectively reduces the profit or the return that the utility is making on the coal plant as it’s going away.”

The utility has said its clean energy plan will avoid between $2 billion to $6.5 billion in costs for customers over the next 35 years.

The Sierra Club’s chapter in Wisconsin said it’s pleased to see Alliant making the clean energy transition as the utility seeks to reduce carbon emissions in the face of climate change. But, the environmental group only partially supported the agreement.

“We feel satisfied that Alliant is closing Edgewater and Columbia (coal plants), and they’re investing in solar projects. However, we continue to have concern that they’re charging customers a fixed fee that’s one of the highest in the nation,” said Laura Lane, chair of the Sierra Club’s Wisconsin Chapter. “My concern stems from the fact that it discourages people from using energy efficiency measures because they’re still going to have to pay this fixed charge.”

She added that Alliant’s $15 monthly fee may cause a disproportionate energy burden on communities of color and low-income residents whose utility costs take up a greater share of household income. Alliant argued that it has the lowest fixed charge among the state’s investor-owned utilities, adding that it’s examining a way to lower that fixed fee.

The utility is also seeking an extension of an arrears management program it launched in February, which helps low-income customers reduce and pay off past-due bills. The program has forgiven more than $2 million in past-due balances so far. Alliant has also agreed to use late fees that are collected to offset funds that are written off through the program.

“We’re really excited about that opportunity to continue to work with our customers who need some additional assistance,” said Michael Greiveldinger, Alliant’s senior regulatory manager.

Alliant also plans to invest in ways for customers to reduce their energy costs through the use of smart thermostats and programs that encourage the use of electric vehicles or shifting energy use to times of lower demand during the day.

Alliant serves 975,000 electric and 420,000 natural gas customers in Wisconsin and Iowa.