WIUM Tristates Public Radio

IUB Holds Meeting in Keokuk; Possible Gas Rate Hike Settlement

Feb 22, 2017

The Iowa Utilities Board (IUB) heard additional testimony in Keokuk's Grand Theater Wednesday morning regarding a proposed natural gas rate hike for roughly 4,000 customers in and around the city.

The rate hike is being requested by Liberty Utilities. In July, the company asked the IUB for permission to increase its rates in Keokuk and Montrose enough to generate an additional $1 million/year.

Soon after, the Iowa Office of Consumer Advocate filed an objection to the rate hike with the IUB. In doing so, the OCA required the IUB to schedule hearings and accept testimony regarding the rate hike.

One such hearing was held at Hawthorne Elementary in Keokuk last September. It drew several hundred residents, with a couple dozen testifying on the record about their opposition to the increase.

The IUB returned to Keokuk Wednesday morning.

“The Board usually holds rate case hearings in Des Moines because there is no central location where customers can attend hearings for other utilities,” said IUB Spokesman Don Tormey in an email after the meeting. “In this instance, since Liberty’s service territory is located in one area of the state, a hearing in Keokuk accomplished the goal of allowing customers to attend.”

This hearing, though, only drew about 40 people, including representatives of Liberty Utilities. Several audience members told the IUB during an impromptu public input session that the board did not do a good job of promoting the meeting or that public input would be allowed.

The actual hearing lasted less than two hours and included testimony from Liberty, OCA, the city of Keokuk and Roquette America, the latter two because they chose to intervene in the case.

The testimony was expected to focus on the proposed rate hike, but the tone changed due to a potential settlement in the case that was presented to the IUB on Friday.

“The Board will usually hold a hearing, even if the parties file a settlement, to ask questions about the settlement and to ensure the Board understands exactly what the settlement means,” said Tormey. “The Board is responsible for making sure rates charged customers are just and reasonable and making sure ‘a settlement’ is reasonable is part of that responsibility.”

The language of the settlement received little discussion during the hearing in Keokuk. Copies were provided to the audience, but it repeatedly referenced other documents filed as part of the rate hike that audience members did not have access to.

Instead, the IUB members focused its questions to the witnesses on three areas:

  1. Is the proposed settlement fair?
  2. Was it a good idea to meet in Keokuk?
  3. Is Liberty Utility seeking too much in reimbursement for the costs associated with the rate hike?

The consensus to Question 1 was that the settlement was fair, though Keokuk Mayor Tom Marion testified that the city “held its nose while signing it.”

Feelings were mixed regarding Question 2 due to the added costs associated with the relocation from Des Moines. It was the IUB members, themselves, who said several times during the hearing that they appreciated the opportunity to meet where the people would be affected.

Question 3 generated the most discussion.

The Iowa Utilities Board has the authority to allow a company such as Liberty Utilities to seek reimbursement for the costs associated with brining forward the rate hike, such as legal costs and expert witnesses.

Liberty said Wednesday that it had already spent more than $640,000 with additional bills to come. And that’s about $30,000 more than originally estimated.

“The city of Keokuk and the Office of Consumer Advocate continue to object to the rate case costs, which create an unreasonable cost to the gas utilities customers and are not covered by the settlement agreement,” said the city in a statement following the meeting. “This cost is currently over $645,000 and will likely end up closer to $1,000,000, a cost which will be borne by the under 5,000 customers in the Liberty Utilities’ Iowa territory.”

It’s unclear when the IUB will rule on the settlement or will decide how much money Liberty Utilities will be reimbursed. The initial deadline to resolve the matter was May 25.