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

RPU-02-2: MidAmerican Energy Company Gas Rate Increase Request

On March 15, 2002, MidAmerican Energy Company filed a proposal with the Iowa Utilities Board (IUB) seeking a $26.6 million annual increase in its rates and charges associated with the delivery of natural gas. The application and proposed tariffs were assigned Docket No. RPU-02-2. 

In May 2002, the Board held customer comment hearings in Des Moines, Davenport, Cedar Rapids, and Sioux City to receive comments from the general public.  Written comments also were accepted.  Comments made at the public meetings and all written comments received were added to the permanent file for the rate proceeding.

On June 12, 2002, the IUB issued an order granting MidAmerican a temporary rate increase of 2.2% or about $13.8 million.

On July 15, 2002, all but one of the parties filed a proposed settlement of all of the issues concerning the proposed permanent rate increase. The settlement proposed that MidAmerican be allowed to increase rates by $17.7 million or 2.6 percent.  One party contested the settlement on the issues of the return on common equity and rate disparities between MidAmerican's east and west zones. A hearing on those two issues was held on September 16, 2002, in the IUB hearing room.

The Board on November 8, 2002, approved the settlement agreement, allowing MidAmerican Energy Company a 2.6 percent permanent revenue increase worth $17,746,034 in additional annual revenues from charges associated with the delivery of natural gas. MidAmerican customers already received a 2.2 percent temporary increase ($13.8 million) in June, so approval of the settlement allows only an additional 0.4 percent increase above the temporary rates.

Under the settlement agreement, MidAmerican will reduce the differences in rates for natural gas delivery between its east and west zones. The company’s two rate zones resulted from the merger of Iowa-Illinois Gas and Electric Company and Midwest Gas Company, which the IUB allowed in 1995. MidAmerican’s east system includes Bettendorf, Coralville, Cedar Rapids, Davenport, Fort Dodge, Iowa City, Ottumwa, and West Liberty. Its west system includes Algona, Charles City, Clarion, the Des Moines metro area, Fort Madison, Hampton, Humboldt, Oskaloosa, Sioux City, Winterset, and Waterloo. The IUB also ordered MidAmerican to eliminate any remaining rate zone disparities in its next permanent rate case application.

As of February 2002, MidAmerican reported serving 513,616 gas customers (463,278 residential customers) in its two Iowa rate zones. Although all customers will be impacted, the approved increase will affect individual customer bills differently because rates and service charges vary by customer class and rate zone.