IUC completes review of Interstate Power and Light’s expenses following rate case, orders reduction in previously approved natural gas rates

Order also opens investigation into IPL’s management efficiency

The Iowa Utilities Commission (IUC) today issued an order with the results of its review of the natural gas and electric rate case for Interstate Power and Light Company (IPL), a subsidiary of Alliant Energy. The review, a requirement of Iowa Code, involved looking at the utility’s costs, revenues, and conduct during a one-year period after the IUC approved a rate increase in Docket No. RPU-2023-0002 based on future test year costs. A utility seeking a rate increase using a future test year bases calculations on projected expenses, rather than historic costs. The IUC then must look at the company’s actual expenses in a subsequent proceeding. 

Today’s order requires a permanent natural gas rate reduction of more than $2.5 million, or $0.01886 per therm of usage, for residential class customers. Iowa’s law for subsequent proceedings only allows the IUC to adjust future rates rather than approve refunds. 

IPL’s rate case was the first future test year rate case to lead to a hearing in a subsequent proceeding, during which the IUC reviews the utility’s actual costs and revenues to determine if any adjustments are needed to rates or they are reasonably consistent with what was allowed in the initial rate case. The review ensures a utility is not overearning or charging improper costs to ratepayers.

In the subsequent proceeding the IUC found: 

• Actual costs and revenues for electric rates were within the acceptable range for return on equity reflected in the rate case projections. 
• Actual costs and revenues for natural gas rates were outside of the acceptable range for the return on equity reflected in the rate case projections.
• Inclusion of spending on chartered flights for IPL executives was not consistent with the underlying rate case settlement agreement. 
• Concerns raised in the subsequent proceeding regarding the implementation of a voluntary employee severance program and call center staff outsourcing should be explored further. 

Based on its findings, the IUC ordered the natural gas rate reduction and will require IPL to file within 20 days information detailing how it will implement new permanent natural gas rates. The company also must file a new tariff, which will require approval by the IUC and will determine the date the rate adjustment takes effect. 

Additionally, the IUC will begin an investigation into IPL’s management efficiency, which will include reviewing concerns raised throughout this proceeding and in other dockets. This new docket, INU-2026-0002, will allow for the most thorough review of the concerns identified by the IUC.

The order also includes a concurrence in part and dissent in part by one Commissioner, who agreed with the majority’s decision that no change in electric rates was necessary and that a subsequent proceeding is intended to be a narrow scope of reviewing actual costs and revenues against those approved in the underlying rate case. However, in dissenting, the Commissioner disagrees with the majority’s decision regarding the amount of the natural gas rate reduction, the methodology used to implement the reduction in natural gas rates, and the opening of Docket No. INU-2026-0002.

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