MADISON, Wis., Dec. 23, 2004 (PRNewswire-FirstCall) — Wisconsin Power and Light Company (WP&L), a subsidiary of Alliant Energy Corporation, filed a $9.2 million (1.2%) annual fuel-only rate increase for electric service with the Public Service Commission of Wisconsin (PSCW). The request is based on increased fuel and purchased power costs incurred in November and December, and the expectation that total annual fuel and purchased power costs will exceed annual projections outside of monitoring levels.
“Fuel and purchased power costs are a significant component of the prices our customers pay for service,” says Barbara J. Swan, president of WP&L. “In this case, fuel and purchased power costs are driven by volatile natural gas prices, which are at historically high levels, and they continue to impact the cost of providing reliable electric service to our customers.”
Under the fuel rules adopted by the PSCW and effective in 2003 for WP&L, the utility can file for a fuel adjustment based on at least one month of actual data and annual cost projections when certain criteria are met. This mechanism ensures both utilities and their customers are treated fairly because it allows for an expedited recovery of costs should fuel and purchased power costs increase, and an expedited decrease in rates should they go down.
Higher costs were primarily driven by the need to purchase replacement power due to the 21-day unplanned extension of a planned outage at the Kewaunee Nuclear Power Plant (KNPP), as well as multiple simultaneous unplanned outages in November and December at other baseload generation facilities.
“The unavailability of baseload energy resulted in the need to purchase power at higher prices compared to the low-cost energy that would have been available from these baseload plants,” says Swan. “While our fossil-fueled generation facilities continued to provide reliable service above nationwide industry standards during 2004, the unexpected extension of the planned outage at the KNPP was a significant contributor to the higher costs.”
According to Swan, both fairness of the fuel rules and the impact of price volatility were demonstrated in the outcome of the fuel-only electric rate case the company filed in February of 2004. “In that case, costs decreased between the time interim and final rates were authorized, so the over- collection is returned to customers, while WP&L recovered its costs of providing service. This approach ensures that price increases, as well as decreases, are recovered in a timely manner and reflected appropriately in the prices our customers pay for service.”
WP&L is in the process of refunding approximately $2.9 million to its retail electric customers as a result of the over-collection in the fuel-only rate case filed in February.
WP&L expects the PSCW to act on the request filed today in January and establish interim rates at that time. A final order is expected approximately two months after the interim order. The PSCW will hold public hearings on both the interim and final rate relief.
As was the case in the fuel-case filed earlier this year, if the amount collected in interim rates through the adjustment is greater than final rates, customers will receive a refund with interest calculated at the utility’s current authorized rate of return on equity (ROE). WP&L’s current ROE is 12 percent.
If approved by the PSCW, typical residential customers using 600 kilowatt- hours of electricity per month would see an increase of approximately $0.53 on their average bill of $59.43.
About Alliant Energy [ www.alliantentenergy.com ]
Alliant Energy is an energy-services provider that serves more than three million customers worldwide. Providing its customers in the Midwest with regulated electricity and natural gas service remains the company’s primary focus. Wisconsin Power and Light, the Company’s Wisconsin utility subsidiary, serves 422,000 electric and 164,000 natural gas customers. Other key business platforms include the international energy market and non-regulated domestic generation. Alliant Energy, headquartered in Madison, Wis., is a Fortune 1000 company traded on the New York Stock Exchange under the symbol LNT.