Consumer Information Energy Telecommunications
Elizabeth S. Jacobs
Nick Wagner
Board Member
Sheila K. Tipton
Board Member

RPU-2001-0005/RPU-2001-0003:  MidAmerican Energy Company Requests for Rate Increase

On June 11, 2001, MidAmerican Energy Company (MidAmerican) filed with the Board a proposed electric rate increase of $50,529,035, identified as Docket No. RPU-01-5. The proposed increase was filed in response to the Office of Consumer Advocate's (OCA) March 14, 2001, request for a $77,002,803 reduction in MidAmerican's electric rates, docketed by the Board as RPU-01-3.

In anticipation of a settlement agreement being filed, the Board suspended the procedural schedule in RPU-01-03 on July 9, 2001, and announced that no procedural schedule would be established in RPU-01-5. On July 13, 2001, a joint settlement agreement was filed with the IUB by MidAmerican, the OCA, and three other intervenors. Intervenors in the contested case that were signatories to the agreement included the International Brotherhood of Electrical Workers Iowa State Conference, Deere and Company, and Local 109 of the International Brotherhood of Electrical Workers AFL and CIO. Intervenors in the case who did not agree to the settlement agreement were Archer Daniels Midland Company  (ADM) and Ag Processing Inc.  The settlement proposed to keep MidAmerican electric rates at current levels through December 31, 2005.

On December 21, 2001, the Board issued an order approving the settlement with minor modifications. MidAmerican, the OCA, and the three other signatories to the settlement accepted the Board's conditions, which included the addition of customer protections enabling the IUB to review company progress toward construction of additional generating plants and to order annually the refund of customer funds held for that purpose, if necessary. The Board also modified a section of the settlement to allow any person, at any time, to propose revenue neutral rate design changes directly with the IUB.  Though these changes would be revenue neutral to MidAmerican, they could result in increases or decreases for some individual customers or customer classes.

During the period covered by the settlement, MidAmerican is allowed to earn up to a 12% return on equity (ROE). If MEC earns an annual ROE of more than 12%, but less than 14%, MidAmerican will retain one-half of the higher earnings. The remaining one-half share for customers will help reduce future customer rate levels by offsetting certain costs (Allowances for Funds Used During Construction) of future MEC generation plant investments. If ROE exceeds 14%, the amounts between 12% and 14% ROE would be split as discussed above; for amounts over 14%, the share retained by MidAmerican will decline to one-sixth, and the share used to reduce future customer rate levels will increase to five-sixths.

On January 10, 2002, ADM filed an application for rehearing of the Board's order approving the settlement. A February 6, 2002, Board order clarified the Board's position on several concerns raised by ADM and denied the application for rehearing. The Board's decision was not appealed to Iowa district court and is now final.