CUB Saves Ratepayers $143 Million

In 2011, CUB intervened in several cases at the Public Service Commission (PSC) in which utilities were seeking rate hikes or permission to build new power plants.  We were successful in rolling back these requests, saving $143 million on electricity bills.

These cases are described below; the numbers in parentheses are the "docket" numbers that identify the case at the PSC.  You can view all the documents, including CUB's expert testimony and legal briefs, submitted in each case by clicking on the docket number which will take you to search area of the PSC's website.  Enter the docket number in the boxes at "Utility/Docket" to see the documents in the case

Alliant Energy, Fuel Rules for 2012 Rates, (6680-FR-104)

On May 18, 2011, Alliant Energy filed an application with the PSC to increase electric rates by $13.4 million, or 1.3 percent, due to projected increases in the cost of fuel for making electricity. 

Alliant updated its rate increase request to $20 million, or 2.0 percent, on August 17, 2011, citing additional fuel costs due to air pollution rules promulgated by the U.S. Environmental Protection Agency.  PSC staff refined Alliant’s request to $30 million, or 3.1 percent.

CUB reviewed revenue allocation and rate design issues, the reasonableness of Alliant’s fuel cost plan, and analyzed whether Alliant’s expected costs were appropriate for complying with the Cross-State Air Pollution Rule.

The PSC issued its final decision on December 23, 2011, allowing Alliant to increase electric rates by $4.4 million, or 0.4 percent.  The PSC agreed with CUB and others and rejected Alliant’s request to increase rates by $22 million to comply with the air pollution rule, which was temporarily stayed on December 30, 2011.

Madison Gas & Electric, Re-Opener for 2012 Rates, (3270-UR-117)

On May 4, 2011, MGE filed a request with the PSC to raise electric rates by $17.9 million, or 4.9 percent.  MGE updated its proposed rate hike on August 26, 2011, to $21.5 million, or 5.9 percent. On November 10, 2011, it increased its request to $35 million, or 9.7 percent to recover costs from EPA’s proposed Cross-State Air Pollution Rule.

MGE said the other main drivers for the electric rate increase were higher costs for fuel to make electricity, and higher costs to purchase electricity for re-sale to customers.

CUB sought to determine whether MGE’s projection of fuel and purchased power costs were appropriate.

The PSC issued its final decision on December 15, 2011, and allowed MGE to increase electric rates by $15.6 million, or 4.3 percent.   The PSC agreed with CUB and others and rejected MGE’s request to increase rates by $14 million to comply with the air pollution rule.

We Energies, Biomass Power Plant, (6630-CE-305)

On March 15, 2010, We Energies asked the PSC for permission to build and own a 50-megawatt cogeneration power plant that would burn wood and produce steam as well as electricity.  Domtar Corporation, a paper company located near Wausau, would use the steam produced by the plant.

We Energies proposed this project in part to comply with Wisconsin’s “renewable portfolio standard,” which requires electric utilities to sell at least 10 percent renewable electricity by 2015. 

CUB submitted testimony in opposition to the plant, because of its very high costs of nearly $5,800 per kilowatt.  CUB also pointed out that Domtar would get a sweet-heart deal on the steam produced by the plant, and that We Energies’ ratepayers would pay hundreds of millions of dollars in higher electric rates that should be paid by Domtar.

The PSC approved the power plant on May 5, 2011, and the PSC agreed with CUB that Domtar must pay more for the steam in order to reduce costs to ratepayers of We Energies.  The PSC also required the shareholders of We Energies to contribute more to the plant.  CUB’s intervention saved ratepayers of We Energies at least $32 million.

We Energies, Fuel Rules for 2012, (6630-FR-103)

On August 3, 2011, We Energies filed an application with the PSC, requesting an increase in electric rates of $50.0 million, or 1.8 percent, to cover higher costs for fuel to make electricity.

We Energies proposed to reduce the rate increase by $26 million, which it received in a settlement with the U.S. Department of Energy for the federal government’s failure to take possession of nuclear waste from the Point Beach Nuclear Power Plant.

The PSC issued its final decision on January 5, 2012, deciding that We Energies could not increase electricity rates.

In making its decision, the PSC agreed with CUB and reduced We Energies request by $0.9 million regarding the appropriate time period for calculating “equivalent forced outage rates” for its power plants. The PSC also agreed with CUB regarding the appropriate time period for estimating “day-ahead make whole payments” from the Midwest Independent Transmission System Operator (MISO), reducing the rate increase by $2.4 million.  The PSC also agreed with CUB that rates should not be increased by $6.7 million because We Energies may not have to pay MISO tariffs for “revenue sufficiency guarantees.”

In total, CUB saved ratepayers about $10 million in this proceeding.

Wisconsin Public Service Corp., Re-opener of Rate Case for 2012 Rates, (6690-UR-120)

On May 2, 2011, WPS filed an application with the PSC to increase electric rates by $33.7 million, or 3.5 percent. WPS modified its request on August 19, 2011 to an increase in electric rates of $64.2 million or 6.7%.  WPS said that complying with EPA’s Cross-State Air Pollution Rule would cause some of the increase in electric rates.  WPS also pointed to rising costs for fuel for making electricity.

CUB reviewed fuel costs, compliance with the new rules for recovery of the cost of fuel to make electricity, and rate options for complying with the air pollution rule.

The PSC issued its final decision on December 9, 2011, allowing WPS to increase electric rates by $8.1 million, or 0.9 percent, and to decrease natural gas rates by $7.2 million, or 2.0 percent.  In an unusual and welcome twist, residential and small commercial customers won’t pay higher electric rates in 2012; the electric rate increase of $8.1 million will be borne entirely by large commercial and industrial customers.

In reaching its decisions regarding rates for 2012, the PSC agreed with CUB and others to reduce the request by $24.6 million, which WPS had sought to comply with the air pollution rule.  The PSC agreed with CUB that WPS shouldn’t charge ratepayers upfront for these costs, but rather track the costs for complying with the rule for possible recovery in the future.

Due to contributions to energy efficiency programs that WPS customers have been making since 2009, Focus on Energy had a surplus of unspent funds of $26.7 million in May 2011.  Therefore, CUB and WPS agreed not to collect $22.8 million from residential and small commercial electric and gas customers during 2012 for energy efficiency programs in WPS’s territory.  Instead, WPS and Focus on Energy will use the surplus of unspent funds to run the energy efficiency programs through December 2013, a year longer than originally planned.

In addition, CUB and WPS agreed that “decoupling” surcharges and credits would cancel each other out, which reduced the requested rate hike by $14.1 million.

In total, CUB was able to reduce WPS’s rate increase by $61.5 million, with WPS agreeing with CUB that $36.9 million should not be included in rates for 2012.

Xcel Energy, Rates for 2012, (4220-UR-117)

On June 1, 2011, Xcel Energy filed an application with the PSC to raise electric rates by $21.9 million or 3.8 percent. On June 15, Xcel increased its rate hike request to $29.2 million, or 5.1 percent.

Xcel said that the proposed increase in electric rates was due to improvements made to various power plants, transmission lines, and distribution systems.  Xcel also expected higher costs for fuel for making electricity in 2012.

CUB suggested ways to reduce the rate increase by having Xcel change “equivalent forced outage rates” for its power plants, develop appropriate estimates of market prices for electricity, defer compliance costs for the EPA’s Cross-State Air Pollution Rule, and use appropriate “production capacity allocators” to help in setting appropriate rates.  Our experts also recommended ways to allocate costs between residential and industrial customers so that all pay their fair share; Xcel’s proposal would have had industrial customers paying lower rates at the expense of higher rates for residential customers.

The PSC issued its final decision in the case on December 22, 2011.  The PSC agreed with CUB regarding the appropriate estimates of market prices for electricity, reducing the rate increase by $1.0 million.   The PSC also agreed with CUB and reduced Xcel’s return on equity (profit) to 10.4 percent from Xcel’s request of 10.75, resulting in a savings of $2.6 million.

Finally, the PSC agreed with CUB and Xcel that customers should receive $13 million from a settlement with the U.S. Department of Energy, regarding the federal government’s failure to take possession of nuclear waste from Xcel’s nuclear reactors in Minnesota.  Xcel customers will receive the settlement proceeds through a one-time credit on a 2012 electric bill.