Legislative Victories

SB459/Act 141

Smart Energy bill signed into law

On March 17 2006, the Smart Energy bill (SB459) was signed into law by Wisconsin Governor Jim Doyle as Wisconsin 2005 Act 141. Act 141 will strengthen Wisconsin's statewide energy efficiency program known as Focus on Energy. Over the past several years nearly $100 million has been diverted from Focus on Energy to reduce the state's budget deficit, even though these funds were collected from utility ratepayers specifically for energy efficiency efforts. These budget raids created an unfair tax on utility customers. Act 141 will protect the funds for Focus on Energy, which means that Wisconsin citizens can receive all the benefits of making our homes and businesses more energy efficient: Each dollar invested in energy efficiency returns nearly 6 dollars to Wisconsin in economic and environmental benefits.

This is a tremendous victory for Wisconsin ratepayers and environment. CUB's top legislative priority was to pass SB 459, the energy bill based on the recommendations from Governor Doyle's Task Force on Energy Efficiency and Renewables, on which CUB participated. This important piece of legislation is a critical component to a strong and stable energy future in Wisconsin.

CUB commends the Governor and all the state Legislators who worked to make Act 141 law.

SB 518

Bad bill dies in session

CUB fought to protect consumers' right to seek refunds by opposing SB 518 is a bill that would have reduced significantly Wisconsin consumers' rights to seek refunds of sales taxes wrongfully collected by retailers. (The identical bill in the Assembly was AB 968). The bill applied to any class action lawsuit seeking any tax refunds. It would require consumers who were charged an incorrect amount of sales tax to apply for a refund with the State Department of Revenue (DOR) rather than with the seller. The bill also prohibited class action lawsuits against the state or any other party if the suit includes the refund of any tax administered by the state.

The portions of SB 518 that applies to class actions were retroactive; that is, they applied not only to lawsuits filed in the future, but to all currently pending class action lawsuits. It would also prohibit consumers from filing class actions that may be their only recourse for collecting refunds that are owed them. Under current state law, businesses, not customers, are responsible for collecting and paying the right amount of sales tax to the state. If a customer wants to challenge the amount of sales tax, he or she can address the concern in a variety of ways, including making a claim directly against the business that overcharged the consumer or by participating in a class action lawsuit.

If a consumer has a large claim and the time and resources to pursue it, filing a claim with the DOR might be a feasible option. However, most consumers that are overcharged for sales taxes have small claims, and are unlikely to invest the time to pursue them. Class action lawsuits are more efficient for both the consumer and the DOR because they streamline the process. Rather than dealing with hundreds of smaller claims, both sides can address all of the claims at one time.

SB 518 died in the waning days of the 2005-2006 legislative session.

Regulatory Victories

WPL Rate Case (6680-UR-115)

CUB helps ratepayers save $15 million

Wisconsin Power & Light (WPL) applied to the PSC to increase gas and electric rates by $95.6 million. Later in the year, WPL revised its request and increased its electric utility rate request to $164.7 million.

During the case, CUB's expert witness argued that WPL was overestimating the costs for fuel for 2007. The PSC agreed with CUB and reduced WPL's request by $1.5 million. CUB also argued that WPL should earn a rate of return (profit) of no more than 10.4% (WPL asked for 11.5%). The PSC approved a profit rate of 10.8%, saving ratepayers $7 million. The PSC also supported CUB's recommendation to exclude an imputation of $119 million in the capital structure for new power plants built in Sheboygan Falls in 2005, saving ratepayers $8 million.

In early 2007, the PSC authorized WPL an electric rate increase of $36.2 million, and a $1.9 million decrease for natural gas. CUB's efforts helped save WPL ratepayers at least $15 million.

PSC Rejects Special Rates for ERCO Worldwide

CUB helps save ratepayers $23 million over 10 years

ERCO Worldwide owns a chemical manufacturing plant in Port Edwards and buys electricity from WPL. As a part of the WPL rate case for 2007 (see above) ERCO was asking for lower electricity rates so that they could invest in equipment that would reduce emissions of mercury from its Port Edwards facility. ERCO asked the PSC to approve a special contract with WPL to lock in a low electric rate that would only increase 4 percent per year, whereas ERCO's electricity rates have increased on average 10% per year since 1997. This contract would have forced WPL's residential and business customers to subsidize ERCO.

Also in this proceeding, WPL had asked the PSC to approve a special electricity rate for ERCO that would force other WPL customers to subsidize ERCO by at least $23 million over the next ten years. CUB argued that the requests for special electricity rates for ERCO would not only be illegal, but if granted, it would set a bad precedent that would encourage other companies to look for handouts from ratepayers. CUB argued that it was the responsibility of ERCO's shareholders to pay for pollution control equipment, and there is no legal basis for WPL's customers to pay for those costs.

The PSC voted unanimously to deny ERCO's request for a special utility rate and also denied WPL's proposed multi-million subsidization of ERCO. CUB appreciates the PSC's decision to defend 100-year-old principles of utility regulation that protect ratepayers from discriminatory deal making between utilities and powerful companies.

WPS Rate Case (6690-UR-118)

CUB helps ratepayers save $10 million

Wisconsin Public Service Corp. (WPS) applied to the PSC to increase gas and electric rates by $155.5 million.

WPS proposed to forego a rate increase in 2008 if the PSC agreed to allow WPS to implement a two-year pilot "revenue stabilization mechanism" (RSM). CUB argued that the PSC should reject the use of this mechanism unless WPS implemented energy efficiency programs to encourage customers to save energy, which WPS was not willing to do. CUB also argued against the RSM because it could allow WPS to receive profits as high as 16.6%. The PSC agreed with CUB and denied WPS's request to use the new pricing mechanism. Had this mechanism been approved, WPS could have earned excess revenues of $68 million.

The PSC concluded the case and authorized a $56.7 million increase for WPS electric operations, a 6.6% increase, and an $18.9 million rate increase for natural gas, a 3.8% increase. CUB's efforts helped reduce WPS's rates by at least $10 million.

Court Victory

CUB vs. WPL

Court sides with CUB; upholds prohibition of "retroactive rate making"

CUB sided with the PSC in a suit brought against the Commission by Wisconsin Power & Light (WPL) regarding interpretation of the fuel rules. WPL took the PSC to court when the PSC denied the utility a rate increase based on increases in fuel costs associated with the shutdown of the Kewaunee Nuclear Power Plant. The PSC originally ruled that to have granted the increase would have violated the long-stranding prohibition against retroactive rate making. WPL sought to have the PSC decision overturned. CUB entered the case in support of the PSC position. The courts sided with CUB and the PSC and ruled against WPL.