WIUM Tristates Public Radio

Keokuk Requests New IUB Hearing

May 18, 2017

The city of Keokuk wants a new hearing before the Iowa Utilities Board, hoping to at least slightly reduce natural gas bills for residents and businesses.

The IUB in late April signed off on a negotiated settlement between Liberty Utilities and the Iowa Office of Consumer Advocate.

The settlement allows Liberty Utilities to increase its annual revenue by $900,000 by hiking monthly natural gas rates. The new rates for roughly 4,400 customers in and around Keokuk are expected to take effect as early as June.

The IUB also determined that Liberty Utilities should be reimbursed nearly $815,000 for expenses incurred during the rate case (legal fees, expert witnesses, travel). The company will be able to add an additional charge to monthly bills for seven years to recover the money.

Iowa Code states the request for reimbursement must be "reasonable and just." Keokuk does not believe that is the case, so this week it filed a request for a new hearing with the IUB.

Keokuk’s request states that the IUB repeatedly failed to explain why it felt nearly $815,000 was reasonable and just, in particular when it comes to the per-customer cost.

Keokuk argues that local customers will be on the hook for an average of $185.15. The city compared that with an average charge of $13.15 per customer for those served by Iowa-American Water Company following an approved rate hike in February.

“The [IUB] never addressed why it is just and reasonable for customers in Keokuk to pay 14 times more per customer in rate expenses than is to be paid by Iowa-American customers,” wrote the city in its hearing request.

The city also argues that allowing a larger reimbursement for a contested rate case is a deterrent to customers.

Liberty, for example, stated that it did not anticipate a challenged rate case, so its original estimate for legal fees and such was more than $200,000 lower than the actual figures. The IUB did punish Liberty for not anticipating a contested rate case, reducing its request for reimbursement by $25,000

“As the record shows, and as raised by Keokuk in its objection, Liberty plans another rate increase in 3-5 years. The [IUB] never explained in its ruling why it is just and reasonable to allow a per-customer expense so large that it would deter customers from exercising their right to object to rate increases… [and] why it is just and reasonable to impose large (even punitive) expenses on customers who merely exercised their right to object to a proposed rate increase that could have been projected to be as high as 80%,” wrote the city in its request for a new hearing.

The IUB has yet to act on the request.