CUB Saves Ratepayers $38 Million

During 2009, three utilities sought increases in rates for electric and gas service to take effect in January 2010.  CUB intervened in these rate case proceedings, and was able to reduce rates by $38 million.

Two utilities asked permission from the Public Service Commission (PSC) to build a wind farm in Colombia County and a power plant in Ashland that will use biomass from forests as fuel.  CUB intervened in these cases to make sure these power plant proposals were good deals for Wisconsin's ratepayers and environment.

We Energies

On March 13, 2009, We Energies (WE) filed an application with the PSC to increase electric rates by 2.8 percent and natural gas rates by 4.6 percent, with the new rates taking effect on January 1, 2010.  On July 3, 2009, We Energies modified its request to raise electric rates by a total of $127 million, or 4.9 percent.

CUB intervened in the case and reviewed WE's requests for recovery of costs related to burning excess coal, costs associated with the Midwest Independent Transmission System Operator (MISO), WE's off-balance sheet obligations, rate allocation and design, and whether WE had too many power plants on-line, which could unnecessarily cause electric rates to be higher than reasonable. 

The PSC issued its decision regarding rate increases for We Energies on December 18, 2009.  The PSC approved an increase in electric rates of $85.8 million (3.4 percent) and a decrease in gas rates of $2.1 million (0.35 percent). 

The PSC agreed with CUB and reduced We Energies rates by $17.3 million, including: a reduction of $2.3 million for unnecessarily burning excess coal; a reduction of $3.8 million for extra costs associated with MISO; and a reduction of $11.2 million by lowering WE's return on equity (profits) from 10.75 percent to 10.4 percent. 

The PSC also agreed with CUB and will open an investigation to address the fact that Wisconsin utilities have too many power plants on-line, a situation known as "excess capacity."

Wisconsin Power & Light

On May 8, 2009, Wisconsin Power & Light (WPL) filed a request to raise electric rates by $85.5 million or 9.2 percent and natural gas rates by $6.2 million or 2.6 percent starting in January 2010.  On July 24, 2009, WPL updated its request to increase electric rates by $103 million or 11.0 percent and natural gas rates by $6.7 million or 2.8 percent.

CUB intervened in the case and reviewed the following issues: WPL's level of profit; cost-of-service studies, class revenue requirement allocations, and rate designs.  CUB also argued that WPL should not be allowed to recover "pre-certification" and "pre-construction" costs associated with the proposed Nelson Dewey power plant, which was rejected by the PSC in November 2008.  

The PSC issued its decision in this case on December 18, 2009.  The PSC approved an increase in electric rates of $58.6 million (6.3 percent) and an increase in gas rates of $5.6 million (2.4 percent).

The PSC agreed with CUB and reduced WPL's rates by $18.4 million, including: a reduction of $2.6 million and $9.3 million for unreasonable pre-certification and pre-construction costs for the never-built Nelson Dewey power plant; and a reduction of $6.5 million by lowering WPL?s return on equity (profits) from 10.6 percent to 10.4 percent.

The PSC also agreed with CUB to require WPL to use electric rates for residential customers with lower fixed charges and higher volumetric charges, which provide incentives to customers to save electricity.  The PSC also agreed with CUB and did not increase the credit for industrial customers willing to interrupt their electricity service for emergencies.

Madison Gas & Electric

On April 29, 2009, Madison Gas & Electric filed a request to raise electric rates by $15.9 million or 4.5 percent, and natural gas rates by $4.4 million or 2.3 percent. The rate increases would take effect in January 2010. 

CUB intervened in this case and reviewed the utility's level of profit and the design of rates for residential customers. 

The PSC issued its decision in this case on December 22, 2009.  The PSC approved an increase in electric rates of $11.9 million (3.3 percent) and a decrease in gas rates of $1.5 million (0.74 percent).

The PSC agreed with CUB and reduced MGE's return on equity (profits) from 10.8 percent to 10.4 percent, a savings to customers of $2 million.  In addition, the PSC also agreed with CUB and reduced rates by $78,000 for lobbying expenses that were incorrectly charged to ratepayers. 

The PSC also agreed with CUB to require MGE to use electric rates for residential customers with lower fixed charges and higher volumetric charges, which provide incentives to customers to save electricity.

Xcel Energy (also known as Northern States Power-Wisconsin), Gasifier at Bayfront Power Plant 

On February 23, 2009, Xcel filed an application to add a biomass gasifier at its Bayfront facility near Ashland so that it can burn biogas instead of coal. 

CUB intervened to make sure the cost of the project was reasonable.  During the proceeding, CUB discovered a study written by a consultant hired by Xcel that concluded that the proposed project may not work at the size and scope envisioned.  CUB brought these concerns to light in legal briefs submitted to the PSC.

The PSC issued an approval for the project on December 22, 2009.  Although the PSC determined that the project was technically feasible, the PSC agreed with CUB to limit the cost-overrun collar to 10 percent, rather than 20 percent sought by Xcel. 

In addition, the PSC agreed with CUB and did not provide Xcel with a guarantee of cost recovery should cost overruns exceed 20 percent and the PSC orders Xcel to cease construction.  These actions will help protect ratepayers from paying millions of dollars for possible cost overruns, or for a project that may not work.