Customers don't like to see their utility bills go up. But even less palatable is a rate increase to foot the bill for an electric company's possible future expansion.
Iowa customers of MidAmerican Energy Co. face both scenarios.
MidAmerican last week notified customers of a rate hike - one that will take effect next month, even though the matter still will be under consideration by the Iowa Utilities Board. Customers can expect a 3 to 5 percent increase this year and another 2 to 3 percent next year.
That won't make customers happy, but, in fairness, it has been 16 years since MidAmerican raised rates, so that shouldn't come as a shock.
However, the bigger point of contention is MidAmerican's simultaneous request to allow another rate increase to cover the cost of building a nuclear power plant in Iowa. The Iowa House last year approved House File 561, the nuclear bill, which is before the Senate Commerce Committee.
This approach of asking consumers to pay for something that might be built has a sort of cart-and-horse relationship.
Let's start with Step 1: Should Iowa be building nuclear reactors as power-generating sources? That's the first thing the state needs to figure out - and that should happen before the energy company starts asking customers to pay for it.
Iowa doesn't necessarily need more power. The Energy Information Administration shows Iowa's electrical supply has grown more than twice as fast as consumption since 2000. That puts Iowa in the market of exporting electricity, which is precisely what MidAmerican could do with more power. If the state of Iowa is game for the build-out of nuclear reactors, that might be a good piece of business for MidAmerican. But why should Iowa consumers pay for the construction of nuclear power plants that would enable MidAmerican to export power to other states?
What's more, the measure in the Iowa Legislature lacks adequate protection for consumers. The bill would allow MidAmerican to recover costs related to a nuclear plant regardless of whether it ever is completed.
Ask the people of Florida how that might work out.
The Florida Legislature in 2006 passed a measure that allowed utilities to charge consumers for construction costs for new nuclear plants - and the planning and development costs. Progress Energy spent $1.1 billion on development and planning before canceling the project. Utility customers already had paid $545 million and eventually will pay the remaining $555 million.
Iowa's elected officials need to reject this measure as it is written. Any such legislation that would force customers to bear the burden of risk and cover the costs of a private company looking to expand its investments is a bad deal for consumers. Lawmakers can't let that happen.
- Telegraph Herald (Dubuque), Feb. 15