Alliant Energy, Southern Minnesota Energy Cooperative file for approval of sale
ALBERT LEA — Alliant Energy’s Minnesota utility and Southern Minnesota Energy Cooperative (SMEC) filed a joint application this week with the Minnesota Public Utilities Commission (MPUC) seeking approval of the sale of Alliant Energy’s electric distribution business to SMEC. SMEC consists of a group of 12 electric cooperatives serving southern Minnesota.
In September 2013, Alliant Energy announced the sale of its Minnesota electric distribution business to SMEC.
The filing with the MPUC includes information on SMEC’s five-year proposed rate transition plan to manage customer rates after the sale is completed.
SMEC’s proposed rate transition plan includes:
- No changes in the base rates portion of current Alliant Energy customers’ bills for three years after SMEC assumes operation of the electric distribution system. Base rates pay for the fixed cost of providing the operation and maintenance of the electric distribution system (includes poles, wires, substations and transformers), customer service, billing, finance and administration.
Current Alliant Energy customers will receive a monthly credit equivalent to approximately $2 per thousand kilowatt-hours on their bill to reflect efficiencies from the sale for three years after SMEC assumes operation of the distribution system.
- Changes in costs of power supply and transmission service will be adjusted on customers’ monthly bills.
This is a pass-through of the actual cost of power and its transmission service charged to the cooperative by the wholesaler.
- SMEC anticipates that typical customer bills will increase approximately 6-7 percent in the first year, 3-4 percent in the second year and 7-8 percent in the third year after SMEC assumes operation of the electric distribution system.
- These increases are lower than what Alliant Energy expects it would have to implement over this period of time if it were to continue ownership of the electric system.
- In the fourth and fifth years after SMEC assumes operation of the distribution system, current Alliant Energy customers’ rates will be merged with the electric rates of existing SMEC cooperative members only if the differences in base rates are within five percent of each other.
- The MPUC will maintain authority to verify compliance with the approved transitional rate plan for five years after the transaction is completed.
Alliant Energy and SMEC have requested a decision from the MPUC in the fourth quarter 2014. In addition, Alliant Energy will also need regulatory approval from the Iowa Utilities Board and Federal Energy Regulatory Commission prior to the electric distribution business sale being completed.
Since 2010, Alliant Energy has kept base rates unchanged. This was despite increases in costs related to requirements to reduce emissions from generating stations, investments to maintain poles, wires and substations for service reliability, and expansion and upgrading of the transmission system to help grow renewable energy resources in Minnesota.
Absent the sale of the electric distribution system to SMEC, Alliant Energy would expect to file an electric rate case in 2014 to recover these costs and would expect additional rate increases in future years.
Alliant Energy will continue to handle all customer services, including emergency response, until the sale is completed. Upon completion of the sale, the local cooperatives will handle all customer service functions. Customers will also receive a letter from their future cooperative with additional details on the transition of service upon completion of the sale.
In September 2013, Alliant Energy also announced the sale of its Minnesota natural gas distribution business to Minnesota Energy Resources. In February 2014, Alliant Energy and Minnesota Energy Resources filed a joint application with the MPUC seeking regulatory approval of Alliant Energy’s natural gas distribution business sale.