Rate Presentation 4913 IIEG - Iowa Industrial Energy Group

2014-2016 Rate Plan
Value Story
• When asked, our customers identify the
following topics as ways MidAmerican Energy
provides value
– Emergency Response and Preparedness
– Renewable Energy Generation
– Energy Efficiency Initiatives
– Investments in Iowa’s Future
Emergency Response and
• MidAmerican Energy provides electricity and
service to our customers around-the-clock
• $170 million spent on storm restoration
efforts during the last five years
• MidAmerican Energy is ranked in the top
quartile in the nation in reliability, despite
dealing with extreme weather in all seasons
Renewable Energy Generation
• MidAmerican Energy is No. 1 in the nation
for ownership of wind generation capacity
among rate-regulated utilities
• Approximately 30% of our generation
capacity comes from wind
• 2,284 MW – 1,267 wind turbines have been
installed in Iowa
Energy Efficiency Initiatives
• MidAmerican Energy has been a leader in
providing energy efficiency programs since 1990
• MidAmerican Energy has provided more than
34,000 home energy assessments in the last five
• MidAmerican Energy has helped customers install
energy-efficient CFL light bulbs that have helped
them save $22 million in energy costs
Investments In Iowa’s Future
• MidAmerican Energy has invested more than
$5 billion in new electric generation in Iowa in
the last decade
• MidAmerican Energy’s economic development
efforts have helped create 2,600 jobs since 2008
• MidAmerican Energy’s Iowa customers have
enjoyed 16 years of rate stability and the seventh
lowest rates in the nation
2014-2016 Rate Plan
MidAmerican Energy’s
Rate Case Objectives
Customer Focused Approach
Balanced Outcome
Soften Customer Impact
Acceptable Financial Results
MidAmerican Energy Is a
Low-Cost Provider
• Currently, we have the seventh lowest rates in
the U.S., and our goal is to continue to be a
low-cost provider
2012 Average Retail Rate / kWh
MidAmerican Energy – SD
MidAmerican Energy – IA
MidAmerican Energy – IL
West North Central Region
National Average
2012 $/kWh Edison Co
* West North Central includes IA, KS, MN, MO, ND, SD and NE.
MidAmerican Energy’s
Iowa Rate History
• MidAmerican Energy was formed by merging Midwest Power
Systems, Inc. and Iowa-Illinois Gas & Electric Company in mid1995. Each company had separate rate structures
• In 1997, the Iowa Utilities Board approved a rate settlement
and introduced rate freeze/revenue-sharing concepts
• Multiple subsequent rate settlements supported continuation
of the rate freeze
• In April 2009, the Iowa Utilities Board issued an order
postponing rate equalization until MidAmerican Energy’s next
rate case
2012-2013 Rate Plan Update
• Filed for an increase in February 2012
– $38.7 million in 2012 and $76 million in 2013 collected through a rider, no
changes to base rates
– For residential customers, the requested increase for March through
December 2012 was approximately $2.30 per month and the 2013 increase
was another $1.30 increase per month
– Additional revenue was needed for environmental equipment costs and the
increase in the costs of producing energy
– Rider no longer in effect after 2013
• Final Iowa Utilities Board order was issued Oct. 8, 2012
• Deferred a general rate increase until 2014
Why A Rate Increase Is Needed?
• Rider from 2012-2013 rate filing ends by Dec. 31, 2013
• MidAmerican Energy took a conservative approach and
requested approximately 50% of the increase that it could
have asked for in the 2012-2013 rate filing
• Current electric rates are based on 1995 business-related
expenses and need to be updated for components, such as:
– Wage and benefit costs
– Costs to maintain and operate generation and delivery facilities
– Investments in generation and distribution, including Walter
Scott, Jr. Energy Center Unit 4; Greater Des Moines Energy
Center; and all wind generation projects
Examples of Increases in
Infrastructure Investment and O&M
1995 to 2011
• Transmission structures and stations – $120.8 million (+39%)
• Distribution structures and stations – $276.2 million (+57%)
• Fuel cost per unit of energy – up 19%, despite having a significant
amount of wind, which has zero fuel cost
• Generation maintenance and operation expenses – $111.8
million (+144.4%)
• Transmission O&M expenses – $4.4 million (+65%)
• Distribution O&M expenses – $44.9 million (+124%)
2014 Rate Case
• MidAmerican desires a three-year phase-in of rates
– Phased-in approach would mean considerable savings for
• Adjustment clauses - energy and transmission expenses
– To account for costs outside MidAmerican's control
• Continuation of revenue sharing will be proposed
– Significant customer benefit in rate base due to previous sharing
• Multiple cost allocation methods and rate designs will be
included in the filing as part of the Iowa Utilities Board order
on rate equalization
Current Rate Disparities
Customer Class
Small General Service
Large General Service
Rate Equalization Proposal
• MidAmerican Energy’s rate equalization proposal will bring
rates to levels that reflect cost of service, regardless of
geographic zone, over a period of 10 years
• The 10-year period for equalization was chosen to limit impacts
to the extent possible on the hardest hit groups
• MidAmerican Energy’s rate filing will contain a single set of
tariffed rates that will apply across the company’s entire service
2014 Rate Case Timing
• Meet with customers and other stakeholders – Throughout the
• Send customer notice – Beginning May 8, 2013
• File rate case – May 17, 2013
• Iowa Utilities Board will conduct public comment hearings after
filing is submitted – Estimated to begin in mid-June
• Temporary rates would go into effect in August 2013
• Final rates effective – April 2014
• Adjustment to rates due to rate equalization will be implemented as
ordered by the Iowa Utilities Board
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