Alliant Given One Year to Respond to Management Audit
By Dave DeWitte, Reporter
CEDAR RAPIDS, Iowa - A rare management audit of Interstate Power & Light resulting from questions raised in a 2010 electric rate case has come back with dozens of recommendations.
Liberty Consulting Group's roughly $1 million audit of the company, to be paid for through future customer rates, was released Thursday by the Iowa Utilities Board. Interstate Power & Light's parent company said the outcome was what it expected.
"We know we're a well-managed company," said Patricia Kampling, chief executive officer of Interstate Power & Light's Madison, Wis.-based parent company, Alliant Energy.
The 354-page report did not appear to sound alarm bells, but will likely cause some embarrassment and trouble for Alliant when digested by consumer advocates and used in future rate cases.
Among the negative findings:
— IPL does not have a quality assurance/ quality control field inspection program for gas operations work conducted by company crews.
— Alliant board members express a strong focus on customer costs, but major decisions coming before them have not consistently been accompanied by substantial, detailed analysis of long-term customer rate impacts.
— IPL’s 2010 and 2011 analyses of the strategic electric resource plan have not considered market electric resource options in a sufficiently objective and robust manner.
— The assignment of a senior Alliant officer as the lead executive for IPL is sound, but optimizing the role of this position requires more resources for measuring the service company.
But more of the findings were positive than negative, and even on one key point identified by critics in the rate case — ballooning transmission costs — Liberty Consulting didn't have much bad to say.
It recommended Alliant work more strategically on regulatory issues regarding the transmission rates of ITC Midwest, which purchased Alliant's Iowa transmission assets, with other stakeholders.
The report made repeated references to work force reductions within Alliant, and said its ratio of employees to revenue is in the middle of the pack with similar utilities.
The Iowa Utilities Board said it would not comment on findings or conclusions of the report at this time, as it expects them to come up in future rate cases.
The board has already rejected a request in the 2010 electric rate case to impose a financial penalty on Alliant for "management inefficiency" as permitted under state regulations.
IPL is required to file a status report no later than October 1, 2013, detailing its plans for implementing the report’s recommendations, including rationale for ecommendations IPL plans to delay or does not intend to implement.
Kampling called the audit a "very professional process" and noted that Liberty praised IPL's cooperation in the report. She said the company will do a
Alliant Vice President of Regulatory and Financial Planning Joel Schmidt said the report gives the company benchmarks for performance, but it will have to weigh the benefits of complying with individual recommendations against the costs to customers.
"A lot of the recommendations are going to increase customer costs," he said.
The state's consumer advocate was not immediately available for comment on the report.
What's On KCRG