MidAmerican Energy officials say a electric-rate increase is necessary to keep up with rising energy-production costs, but that didn’t do much to soothe locals’ concerns Thursday night.

Officials from the company and the Iowa Utilities Baord held a public hearing in Iowa City on Thursday evening to explain why they want to increase rates by an average of $2.33 each month for the rest of 2012 and an additional $1.30 each month in 2013.

MidAmerican spokesman Tim Grabinski said the company’s coal-transport contract with Union Pacific Railroad will soon expire, leading to a likely price increase as the company looks at bids for alternate services. Other costs have also been on the rise, he said.

"We are fundamentally at a point that we have to start looking at increases," MidAmerican Energy Chief Executive Officer Bill Fehrman said.

But many MidAmerican customers expressed concerns over the rate changes. Customers questioned whether the hike is wise while the economy is still sluggish.

"I can’t afford to be paying electric bills and gas bills that I paid this year," local resident George Thompson said. "And this was a very mild winter."

Jean Falk, who said she had recently been diagnosed with cystic fibrosis said, offered similar concerns.

"I’m here for a number of reasons. Because, you’re looking at someone who really depends on utilities in order to breathe," she said. "I don’t have this kind of money every month to put away at this point, unless I win the lottery."

MidAmerican officials said they understood customers’ concerns. They said their energy-efficiency programs can aid to those struggling with energy bills.

"We always say that the most important thing is to call us," said Terry Ousley, the MidAmerican vice president of customer service. "We’re in touch every day with community-action agencies."

MidAmerican began sending out rate-increase notices to consumers in January and filed an electric-rate increase request with the Iowa Utilities Board in February, state officials said.

The new rates took effect this month, but state officials can squelch the increase following public input. That decision will come by the end of the year.

"If it is determined that the rate increase would be less or not allowed, the customers would receive a refund, plus interest," Grabinski said.

Fehrman agreed that the rate increase would be hard on consumers but said the company needed to make the decision.

"We know that there is never a good time to do this, but there are reasons for it, and we are committed to try to keep our costs as low as we can," he said. "The fact of the matter is we’re in a situation now where we have to be the judge."