Welcome to the Department of Justice, Iowa Attorney General Tom Miller

For immediate release: Tuesday, July 16, 2002.

Contact: John R. Perkins, Consumer Advocate,

Consumer Advocate and MidAmerican Reach Agreement on Proposed Gas Utility Rates

DES MOINES. Iowa Consumer Advocate John R. Perkins announced Tuesday that his office has reached a settlement agreement with MidAmerican Energy Company that would allow MidAmerican to raise its natural gas rates by $17.7 million a year for the next two years instead of $26.6 million per year that was sought by the company.

The proposed agreement must be reviewed by the Iowa Utilities Board.

The Office of Consumer Advocate represents consumers in utility rate cases that come before the Utilities Board. The OCA is a division of the Iowa Department of Justice.

MidAmerican filed a request March 15, 2002, for the $26.6 million annual increase in natural gas operating revenues. Perkins said his office, MidAmerican and several large industrial customers entered into settlement discussions which resulted in the agreement that would allow MidAmerican to raise its natural gas rates and charges to collect an additional $17,746,034 annually for the next two years. During the period MidAmerican may not increase its rates further.

Because of previous mergers, MidAmerican has two separate rate zones in the state. Under MidAmerican's original request, gas rates for its residential customers in the eastern zone would have increased by an average of 8.4% and residential customers in the western zone would have seen an average increase of 4.6%. Under the agreement, the average residential customer in the eastern zone will see an increase of 6.8%, and the average residential customer in the western zone will see an increase of 2.7%. The agreement makes progress toward equalizing the rates in the two zones.

Iowa communities served by MidAmerican include Algona, Bettendorf, Cedar Rapids, Charles City, Davenport, Des Moines, Fort Dodge, Fort Madison, Hampton, Ida Grove, Iowa City, LeMars, Missouri Valley, Oskaloosa, Ottumwa, Red Oak, Sheldon, Sioux City, and Waterloo.

Also signing the agreement were Deere & Company and the International Brotherhood of Electrical Workers, AFL-CIO Local 109.

Other participants to the settlement discussions were Archer Daniels Midland Company, Tyson Foods, Inc., Nestle Purina PetCare Company, Ag Processing, Inc., Cargill Incorporated, Hormel Foods Corporation, Northern Natural Gas Company and Interstate Power and Light Company. Although they did not sign the agreement, those companies agreed not to object to the settlement.

Perkins commended the parties on their hard work in arriving at the settlement. "Clearly, the individual participants had wide-ranging interests that needed to be accommodated," he said.

"After an extensive review of MidAmerican's data, our office believes the settlement fairly represents the amount of additional money MidAmerican needs to continue to bring reliable natural gas products to all its Iowa customers, and that each class of customer will be paying its fair share of the additional costs," Perkins said.

Jennifer Easler, a staff attorney with the Office of Consumer Advocate, led the team negotiating the settlement.

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