CUB Saves Ratepayers $704 Million

The PSC and others accepted many of CUB’s suggestions for ways to lower costs to consumers, saving $704 million on your future electric bills.  Notably, CUB helped save Wisconsin electricity customers at least $600 million by opposing a near $1 billion project proposed by the American Transmission Company to build transmission lines from Green Bay to Michigan’s Upper Peninsula.

Below are summaries of the cases, including CUB’s recommendations and the decisions by the PSC and other agencies.  Each proceeding is identified by a “docket number,” which is included in the title of each summary. You can view most the documents submitted in each case, including CUB’s expert testimony and legal briefs, by entering the docket number on the PSC’s website, http://psc.wi.gov

We Energies, Rates for 2013 and 2014, (5-UR-106)

On March 23, 2012, We Energies filed a request with the Public Service Commission to raise electric rates by $99 million, or 3.6 percent, starting January 1, 2013, and another increase of $100 million, or 3.6 percent, starting January 1, 2014. 

We Energies said they needed the increase for two new coal-fired power plants at Oak Creek, new pollution controls being installed on the older Oak Creek units, the new Glacier Hills wind farm, and the new biomass-fired power plant being built in Rothschild, near Wausau.

CUB intervened in this case and investigated the cost overruns of $182 million for the two new coal-fired power plants at Oak Creek, which cost over $2.3 billion to build.  CUB also raised questions about the Valley Power Plant, a two-unit coal-fired power plant that produces electricity and steam for downtown Milwaukee customers.  Not only does the Valley plant pollute nearby neighborhoods with toxic emissions, the plant is very expensive to run, and the rates paid by steam customers are heavily subsidized by electric customers.

The PSC agreed with CUB on a number of issues, and reduced the rate increases by $42 million.  Noteworthy reductions include $24 million for converting the new Oak Creek plants to burn western coal: We Energies can’t recover this cost from ratepayers until the plants are actually able to burn western coal.  Other reductions in the rate increase totaling about $12 million were for costs related to building the Oak Creek plants that exceeded the 5 percent “collar” for cost overruns.  Typically, utilities get 10 percent cost-overrun collars, but CUB successfully argued in 2003 for a 5 percent collar, saving consumers millions in rate increases.

On December 21, 2012, the PSC issued its final decision, and allowed We Energies to raise its electric rates for 2013 by $114.8 million, or 4.2 percent.  Ratepayers will be hit with another increase of $73 million, or 2.6 percent, when 2014 rates start next January.

American Transmission Company, “Northern Plan” for Two 345 kV Transmission Lines for the Upper Peninsula of Michigan, 137-CE-166, (137-CE-166)

In November 2011, American Transmission Company announced that it was studying whether two 345,000 volt transmission lines should be built to serve Marquette, Michigan and surrounding areas in the Upper Peninsula.  The proposed lines would run from Green Bay to Marquette, and from Wausau to Marquette, with the latter line slicing through the Chequamegon-Nicolet National Forest.

If built, ATC’s proposals would cost around $2 billion, and two commissioners at the Public Service Commission immediately expressed concerns about Wisconsin ratepayers paying to serve Michigan’s U.P.

ATC’s announcement followed several developments in the U.P., particularly the announcement by We Energies that it may shut down its Presque Isle Power Plant instead of adding expensive pollution controls.  The Presque Isle plant consists of five coal-fired units that together produce 431 megawatts of electricity.

In the spring of 2012, We Energies announced it was working with Wolverine Power Cooperative (Cadillac, MI) on options for Presque Isle, including repowering with natural gas.  In November 2012, We Energies and Wolverine Power announced that Wolverine will invest $140 million in new pollution controls that will keep the coal plant open, reducing but not eliminating the need for new transmission lines.

During the spring of 2012, CUB, the Environmental Law & Policy Center, and other groups provided several rounds of comments to the Midwest Independent Transmission System Operator, which controls the Midwest electric grid.  CUB and ELPC raised concerns with MISO about the cost and environmental impact of ATC’s proposal.

In June 2012, analysts at MISO recommended a smaller set of transmission lines costing less than $300 million.  In February 2013, ATC estimated the smaller project would cost between $273 million and $409 million.

In opposing the larger project of lines from Green Bay to Marquette with a price tag near $1 billion, CUB helped save Wisconsin electricity customers at least $600 million in future electricity costs (the other billion-dollar proposed line from Wausau to Marquette appears to be unneeded).

Alliant Energy, Rates for 2013 & 2014, 6680-UR-118, (6680-UR-118)

On May 3, 2012, Alliant Energy filed an application with the Public Service Commission to freeze “base electric rates” for 2013 and 2014, and reduce gas delivery rates in 2013 and freeze those rates in 2014.

CUB and the Wisconsin Industrial Energy Group negotiated a settlement with Alliant in the months before the utility made its filing.  Although settlements of rate cases are rare in Wisconsin, PSC staff believed that Alliant could freeze its electricity and gas rates for two years without going through the full scrutiny of a rate case. 

After reviewing a focused set of information regarding Alliant’s rates, CUB and WIEG were able to agree with Alliant’s proposed rate freeze for 2013 and 2014, though electric rates may change in these years due to changing prices for fuels used to make electricity.  The PSC approved Alliant’s rate freeze proposal on June 15, 2012.

Madison Gas & Electric, Rates for 2013, (3270-UR-118)

On March 23, 2012, Madison Gas & Electric applied with the Public Service Commission to raise electric rates by $23 million, or 5.8 percent, starting January 1, 2013.

Regarding electric rates, MGE said the main drivers for the increase are the two new coal-fired power plants at Oak Creek, south of Milwaukee, in which MGE has a small ownership share along with We Energies and WPPI Energy.  Other drivers include new pollution controls being installed at the Columbia power plant near Portage and additional costs for transmitting power from power plants to substations.

CUB intervened in this case and investigated MGE’s attempt to dramatically increase a residential customer’s “customer charge,” the part of the electric bill that more or less stays the same each month, and doesn’t change based on usage (the other part of the electric bill is the “energy charge,” which changes based on usage).  When customer charges make up more of a bill, they dampen the cost savings customers can realize by saving energy.  CUB is opposed to higher customer charges because they can reduce a customer’s incentive to save energy.

CUB also dug through hundreds of pages of utility paperwork and found a math error, saving customers more than $500,000.

On December 14, 2012, the PSC issued its final decision on this case, allowing MGE to raise its electric rates by $14.9 million, or 3.8 percent.

Wisconsin Public Service Corp., Rates for 2013, (6690-UR-121)

On March 30, 2012, Wisconsin Public Service Corp. filed a request with the Public Service Commission to raise electric rates by $85 million, or 9.2 percent, starting January 1, 2013.

An audit performed by PSC staff during the summer reduced the rate increase to about $56 million.

While PSC staff were performing the audit, WPS engaged CUB and other parties in settlement negotiations, which resulted in no increase in electric rates for 2013.

The PSC approved the settlement and no increase in electric rates in its final decision issued on December 7, 2012.

Xcel Energy, Rates for 2013, (4220-UR-118)

On June 1, 2012, Xcel Energy filed an application with the Public Service Commission to raise electric rates by $39.1 million, or 6.7 percent, starting January 1, 2013.  The utility also sought to increase rates for delivering natural gas by $5.3 million, or 4.9 percent.

Xcel said the main drivers for the large increase in electric and gas rates are new transmission lines, major work on its two nuclear plants in Minnesota, restoration of a contaminated site in Ashland, other maintenance projects, and general inflation.

Xcel needs to clean up a site in Ashland where manufactured gas was made between 1885 and 1947.  The site, which is on the shore of Lake Superior, is on the U.S. Environmental Protection Agency’s “national priorities list,” which is part of the Superfund program to clean up contaminated areas.  The site was also used for many other industrial and municipal purposes, and clean-up costs are estimated to be at least $100 million.

On August 9, 2012, Xcel announced a settlement with the U.S. Department of Justice and other agencies regarding the Ashland project, and will pay about $40 million to clean the land-portion of the site.  CUB investigated Xcel’s proposal to charge ratepayers for this clean up. Costs to clean the lake-portion of the site will be investigated in future proceedings.

CUB also tried to reduce the size of the increase in electric and gas rates by questioning the costs charged to customers for fuel to make electricity, the allocation of utility costs between residential and industrial customers, and the design of residential rates.

On December 27, 2012, the PSC issued its final decision, allowing Xcel to increase electric rates by $36 million, or 6.1 percent.  Natural gas delivery rates rose by $2.7 million, or 2.5 percent.  The PSC agreed with CUB and reduced the rate increases by about $5 million: Xcel can’t charge ratepayers for incentive pay for management-level employees, and costs for cleaning up the Ashland Superfund site will be collected over more years.  CUB also successfully kept electric customers from having to pay for cleaning up the Ashland site, though the burden now falls completely on gas customers.