The city of Keokuk says its residents and businesses should not be on the hook for the extra fees associated with a utility company's plan to increase natural gas rates. So it filed an objection with the Iowa Utilities Board on March 30.
Liberty Utilities asked the IUB in July 2016 for the authority to increase Iowa rates enough to generate an additional $1 million annually. The company provides natural gas to fewer than 4,500 customers in Iowa, with almost all of them in or around Keokuk.
A settlement has been reached on the rate hike, but few details have been made public. Before it takes effect, though, the IUB must decide how much money Liberty should be reimbursed by its customers for bringing forward the rate case. The company wants to be reimbursed for legal fees and the costs of expert witnesses, customer notices, and studies or surveys.
The company said in a filing on March 22, 2017, that it has spent $839,643 through March 17, 2017. That's nearly $225,000 more than originally estimated last fall.
The company said the increased cost had to do with its assumption of an early settlement with the Iowa Office of Consumer Advocate, as opposed to litigating a full rate case.
City Administrator Aaron Burnett said it's not fair to penalize Keokuk residents and businesses for standing up to a massive rate hike.
“Keokuk stands by the fact that this is an unreasonable cost, it’s an unjust cost and it’s not something that should be allocated out to customers,” said Burnett.
The city’s objection to the reimbursements states that the IUB must consider the economic conditions facing Keokuk.
“This board heard un-contradicted testimony regarding the demographics of the population of the City of Keokuk. Specifically that testimony highlighted the extraordinarily high number of persons on a fixed income, high unemployment and general poverty in the community. In spite of that knowledge, Liberty Utilities placed this undue $840,000 burden on those customers, having a disproportionately hard impact on the most vulnerable consumers.”
Burnett said the city also objects to the IUB and the OCA seeking a total of $230,712.48 in reimbursements for their role in the rate hike case, including transportation and labor.
“That’s another $1 million on the backs of Keokuk,” said Burnett. “Is that fair, is that how it should work out? I don’t think so."
In its objection, Keokuk asked the IUB to carefully examine each request to determine if it is really something residents and business should be forced to pay.
The OCA filed its own response last week to Liberty's request for reimbursement. The state agency argued that the company's request included vague language and did not follow state code.
Burnett said the bottom line is that the regulatory fees have forced Keokuk to at least consider the possibility of a municipal natural gas utility.
“When you talk about a $1 million regulatory cost, when that could be $0 when it comes down to the city of Keokuk, it could operate the same way as the water utility and have a board providing oversight and completely do away with the rate case costs that are falling on the backs of the rate payers," he said.
The Iowa Utilities Board has until May 25 to make a final ruling on the rate case settlement and the dispute over the reimbursements.