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RATE SOURCE
Rates
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Gas and electric rates are regulated by state regulators following specific ratemaking rules. In Iowa the regulatory body is the Iowa Utilities Board, in Illinois the regulatory body is the Illinois Commerce Commission and in South Dakota the regulatory body is the South Dakota Public Utilities Commission. The city councils South Sioux City and Dakota City regulate natural gas delivery service rates in Nebraska.
The South Sioux City and Dakota City Councils recently approved an increase of approximately $276,000 for Nebraska natural gas delivery service rates. The increase for small use customers will be about 4.4 percent effective January 2010. MidAmerican Energy’s last gas rate increase in Nebraska was in 1995.
The Illinois Commerce Commission approved changes to MidAmerican Energy’s natural gas distribution rates, effective April 8, 2010. The average residential increase will be approximately $4 per month. Most small business customers will see a decrease in their distribution charges; larger business customers’ bills will remain the same or increase slightly. This is MidAmerican’s first natural gas distribution increase in Illinois in nearly eight years.
Each regulatory body has specific ratemaking rules and procedures. Each follows the same general theory, allowing recovery of operating expenses. Utilities also are allowed to recover the costs of their capitalized assets like electric generating stations, natural gas distribution pipeline and electric substations. These costs are recovered over the estimated life of the assets. Utilities also are allowed to earn a fair return on their assets to compensate investors for capital investments. The rate of return on the investment is determined by the regulating body.
The total amount of the costs to be recovered and the return on investment equals the amount that the utility is entitled to recover in its rate and is spread over the total usage and customer base to establish a monthly customer charge and a rate per therm for natural gas or kilowatt-hour for electricity. The regulatory body in each state approves the allocation of these costs to each tariff.
MidAmerican Energy maintains a copy of each of its tariffs on its Web site. The tariffs can be viewed by selecting the Rates tab at www.midamericanenergy.com.
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