Wisconsin Public Service Corp.
Fuel Case 2017
Docket 6690-FR-106

On July 1, 2016 Wisconsin Public Service Corporation (WPSC) applied to the PSCW for authorization to implement new electric rates according to its 2017 Fuel Cost Plan. Because the WEC Energy Group (which includes WPSC) used the same modeling assumptions to develop the WEPCO and WPSC fuel plans, most of the litigated issues related to WPSC’s fuel plan were addressed by the Commission in the WEPCO fuel plan docket.

WPSC requested fuel cost recovery of $27.73/MWh which represents a $17.4 million increase as compared to current fuel costs. WPSC claimed that the primary drivers of the fuel cost increase were forecasted higher natural gas prices used for fuel in electric generation plants, and higher forecasted market prices for purchased power.

An important item to continue to monitor is the ReACT emissions control project installed at the Weston 3 coal plant.  The PSC approved the ReACT project in April, 2013 at an approved capital cost of $275 million.  Actual costs for the project have soared to $338 million as of December, 2016 (AFUDC excluded).  It is essential that this cost increase be reviewed in a future WPSC rate case to determine whether the increased costs are prudent, and if not, whether ratepayers should be liable for the costs.

The PSCW issued its final decision on December 22, 2016. WPSC’s monitored fuel costs were decreased by $4.7 million compared to its 2016 monitored fuel costs, and will result in a revenue requirement reduction of approximately 0.5 percent.

Wisconsin Public Service Corp.
Rates for 2016
Docket 6690-UR-124

In April 2015, Wisconsin Public Service Corporation (WPSC) filed an application with the Public Service Commission (PSC) to increase electric rates by $94.1 million, or 9.4 percent, and natural gas rates by $9.1 million, or 2.7 percent, starting January 1, 2016.  WPSC later upped its electric rate increase request to $96.9 million, or 9.7 percent.  WPSC also requested authority to increase its residential customer charge from $19 per month to $25 per month, a 32 percent increase.

CUB intervened in the proceeding and filed expert testimony opposing WPSC’s proposed customer charge increase, arguing that the proposal will likely distort price signals, frustrate investments in energy efficiency and distributed resources, and disproportionally burden low-usage customers.  Further, CUB’s witness demonstrated that the range of results from the cost of service studies in the proceeding demonstrated that no increase to the customer charge was warranted.

In December 2015, the PSC issued its rate order.  The PSC declined to raise the customer charge as much as WPSC requested, and set the residential customer charge at $21.00 per month.

CUB also filed expert testimony challenging WPSC’s request for a 10.20 percent authorized return on equity (ROE).  The authorized ROE is the allowed rate of profit to shareholders for a regulated company, and it should reflect the market-based cost of capital for a regulated firm.  CUB’s witness presented evidence demonstrating the currently low costs of capital in the marketplace, and undertook financial modeling using market data for similarly situated utilities to calculate an appropriate ROE for WPSC.  CUB recommended an 8.75 percent authorized ROE.

Consistent with testimony presented by CUB and other intervenors identifying downward trends in authorized ROEs, the PSC decided to reduce WPSC’s authorized ROE to 10.00 percent, which reduces  WPSC’s combined electric and natural gas revenue requirement by $3.6 million.

Additionally, CUB filed testimony regarding certain items in WPSC’s fuel cost plan.  Specifically, CUB recommend that the PSC not allow ratepayer recovery of uneconomic dispatch costs associated with testing new pollution control equipment at the Weston 3 generating unit.  CUB’s witness testified that the uneconomic dispatch costs are not a technical requirement and WPSC could have contracted with its vendor to avoid incurring the costs.  The PSC determined that WPSC could recover from ratepayers only the first six months of uneconomic dispatch costs.  CUB will continue to monitor cost overruns associated with the construction of the pollution control project at Weston 3, and anticipates examining those costs when they are up for review in a future case.

CUB advocated for or supported other downward adjustments to WPSC’s requested revenue and rate increases. The PSC declined to approve the overall increase sought by WPSC, and in fact ordered an electric rate decrease of $7.8 million, or a 0.78 percent decrease, and a natural gas rate decrease of $6.2 million, or a 2.06 percent decrease.

Wisconsin Public Service Corp.
Rates for 2015
Docket 6690-UR-123
CUB helps cut WPSC utility bills by $11.5 million!

In April 2014, Wisconsin Public Service Corporation (WPSC) filed an application with the PSC to increase electric rates by $76.8 million in 2015, an 8% increase.  WPSC also requested authority to increase the monthly residential electric connection fee from $10.40/month to $25.00/month, a shocking increase of 140%.

CUB filed testimony with the PSC stating that WPSC’s proposal to increase the residential connection fee should be denied because it would destabilize price signals to consumers for reducing energy usage, disproportionately increase bills for the utility’s smallest residential customers, and exacerbate the subsidization of larger residential customers’ costs by these lower-usage customers.  CUB’s recommendation to the PSC was that there should be no increase approved for the monthly electric connection fees for residential and small business customers.

CUB further argued that WPSC should not receive $9 million of ratepayer payments for non-executive employee incentive compensation programs, and that it should not collect costs for new computer software that the company couldn’t justify in its filing.

In December 2014, the Commission issued its order approving an electric rate increase of $24.6 million, a 2.5% increase ($52.2 million less than WPSC originally requested); denied ratepayer recovery of $9 million for employee incentive compensation programs; reduced costs for new computer software by $2.5 million, and increased the monthly residential electric connection charge to $19/month.

CUB’s work helped save ratepayers $11.5 million!

Wisconsin Public Service Corp.
Rates for 2014
Docket 6690-UR-122

In March 2013, WPS requested authorization from the Public Service Commission to raise electric and natural gas rates starting January 1, 2014.  WPS requested a $75.9 million, or 7.7 percent electric rate increase, and a $21.2 million, or 6.5 percent natural gas rate increase.

CUB intervened in the case and provided expert testimony in opposition to WPS’ requested profit level, proposed increase of residential electric rates, and continuation of its electric and gas decoupling or true-up mechanism.  CUB also opposed the utility’s request for ratepayers to pay for executive and non-executive employee incentive compensation packages.

In December 2013, the Commission ordered a $12.8 million electric rate decrease, or -1.32 percent, and a $4.0 million natural gas rate increase, or 1.23 percent.  The Commission’s decision results in nearly a $90 million savings to WPS customers on electric rates in 2014.

Wisconsin Public Service Corp.
Purchase of Fox Energy Center
Docket 6690-EB-105

On October 12, 2012, WPS filed an application with the PSC for permission to buy the Fox Energy Center for $440 million.  The Fox Energy Center, located near Kaukauna, is a 600 megawatt power plant that runs on natural gas, and is currently owned by subsidiaries of General Electric and Tyr Energy.

CUB intervened in the case and submitted comments in December 2012, requesting that WPS provide additional analysis about whether buying the plant or continuing to purchase the electricity from the plant would be the best option.

The PSC decided the case on February 8, 2013, and allowed WPS to purchase the Fox Energy Center.  The PSC agreed with CUB and added several conditions to the sale, including: WPS can earn income on preliminary purchase costs at the rate of short-term debt as opposed to much higher rates based on the utility’s cost of capital; and for WPS to submit periodic reports on the operation and maintenance of the plant.

Wisconsin Public Service Corp.
System Modernization and Reliability Project
Docket 6690-CE-198

In October 2012, WPS requested authorization from the Public Service Commission to spend a total of $222.5 million for 200 to 300 miles of electric distribution system improvements annually over five years.  Distribution lines run from utility substations to homes and businesses, and above-ground lines can be knocked down by storms and accidents causing electrical outages.  WPS proposed to underground 1,250 miles of lines and to install automated controls on another 400 miles of lines.

CUB intervened in the case and filed expert testimony raising concerns regarding whether the costs of the project were reasonable in comparison to the expected benefit.  In June 2013, the Commission approved the project.  As a condition of approval, the Commission agreed with CUB that the project should be re-evaluated in two years and that WPS should survey its customers to see if they support the project at the size, scope and cost WPS has proposed.  WPS must also issue periodic reports about the cost of the project and whether it is reducing the number and frequency of outages in the upgraded areas.

Wisconsin Public Service Corp.
Retrofit at Weston Unit 3
Docket 6690-CE-197

In May 2012, Wisconsin Public Service Corporation requested authorization from the Public Service Commission to install a pollution control technology known as ReACT at Weston Unit 3, a 321 megawatt coal-fired power plant located near Wausau.  WPS estimated that the ReACT system would cost $275 million.  The technology would primarily reduce sulfur dioxide emissions with some reduction in nitrogen oxide and mercury emissions as well.

CUB intervened in the case and expressed concerns regarding the potential for the project to experience cost overruns.  The Commission approved the project at a cost of $275 million and agreed with CUB’s concerns.  The Commission required WPS to report any cost overruns above five percent associated with the construction of the project and the operation of the ReACT technology, all to reduce cost risk to ratepayers.

In January 2014, WPS informed the Commission that it is now projecting the cost of installing ReACT to be $345 million, a 25 percent increase over the Commission approved cost.  CUB intends to address the cost overrun issue in WPS’ upcoming rate case.

Wisconsin Public Service Corp.
Rates for 2013
Docket 6690-UR-121

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

An audit perfomred by the 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.  In effect, CUB helped save ratepayers $56 million in an unneeded rate increase.

Wisconsin Public Service Corp.
Re-opener of Rate Case for 2012 Rates
Docket 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, and natural gas rates by $1.1 million, or 0.3 percent.  WPS modified its request on August 19, 2011 to an increase in electric rates of $64.9 million or 6.8%, and a zero increase in natural gas rates.  If changed by the PSC, the electric rates would take effect on January 1, 2012.

WPS said that complying with the Cross-State Air Pollution Rule (CSAPR), which was recently promulgated by the U.S. Environmental Protection Agency, would cause some of the increase in electric rates.  WPS also pointed to rising costs for fuel for making electricity.

CUB intervened in the case and reviewed fuel costs, reviewed compliance with the new rules for recovery of the cost of fuel to make electricity, and developed options for including in rates some of the costs of complying with CSAPR.

The PSC issued its final decision in the case 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 CSAPR.  The PSC agreed with CUB that, given the uncertainty of the costs for complying with CSAPR, WPS shouldn’t charge ratepayers upfront for these costs, but rather WPS should track compliance costs for possible recovery in the future.

Due to extra contributions to energy efficiency programs that WPS customers had been making between 2009 and 2011, Focus on Energy had a surplus of unspent funds of $26.7 million.  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.  WPS was owed $14 million for decoupling costs incurred in 2010, whereas WPS customers would likely be owed a decoupling credit of $14 million incurred in 2011.

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

Wisconsin Public Service Corp.
Energy Efficiency Pilots

In December 2008, the PSC approved an agreement between CUB and WPS that allows WPS to use revenue-per-customer decoupling for residential and commercial electric and gas customers. Along with decoupling, WPS agreed to double its payments to Wisconsin’s statewide energy efficiency program called Focus on Energy.  The ratepayers of WPS will provide Focus with an additional $40 million between 2009 and 2012.

WPS also agreed to work with CUB and Focus on Energy to implement three community-based pilots to test enhanced energy efficiency programs and innovative rate options.  The first pilot started in Brillion in October 2009, the second pilot started in Allouez in October 2010, and the third pilot started in Plover in June 2011. The pilots came to a close at the end of December 2012 and are being evaluated for their energy savings.  Final evaluation reports are expected in June 2013.

CUB will be involved in these pilots through 2013, and has a contract with Focus on Energy to cover staff time and expenses.

WPS Rate Increase Request Slashed
Wisconsin Public Service Corp.
Rates for 2011
Docket 6690-UR-120

On April 1, 2010, WPS filed an application with the PSC to increase electric rates by $64.2 million (6.9%) and natural gas rates by $5 million (1.2%).  The new rates would take effect on January 1, 2011.

CUB intervened in the case and urged the PSC to reduce WPS's profits.  CUB also reviewed the changes WPS wanted to make to the "decoupling mechanism," which would allow the utility to charge higher rates. 

CUB also explored why WPS was trying to charge customers for costs associated with unexpected shut downs of the new Weston 4 coal-fired power plant.  The boiler tubes of the plant have been clogging up due to "exfoliation" of material inside the tubes.  The clogged tubes have forced periodic shut downs of the plant, and WPS was trying to charge customers for make-up electricity WPS had to purchase on the spot market.

The PSC issued its decision in this case on December 16, 2010.  The PSC accepted many of CUB's recommendations and reduced WPS's increase in electric rates to $8 million, or about 1 percent.  The PSC agreed with CUB and lowered WPS' return on equity (profit) to 10.3 percent, which means that ratepayers will pay $13.3 million less than requested by WPS. 

Unfortunately, the PSC did not find WPS "imprudent" for the clogging problems at the Weston 4 power plant, as CUB had recommended.  Had the PSC followed our advice, ratepayers would have saved another $4.5 million.

Wisconsin Public Service Corp.
Energy Efficiency Pilots

In December 2008, the PSC approved an agreement between CUB and Wisconsin Public Service Corp. (WPS) that allows WPS to use revenue-per-customer decoupling for residential and commercial electric and gas customers. Along with decoupling, WPS agreed to double its payments to Wisconsin's statewide energy efficiency program called Focus on Energy.  The ratepayers of WPS will provide Focus with an additional $50 million between 2009 and 2012.

WPS also agreed to work with CUB and Focus on Energy to implement three community-based pilots to test enhanced energy efficiency programs and innovative rate options.  The first pilot started in Brillion on October 1, 2009, and the other two pilots will start in 2010 and 2011. The pilots will conclude at the end of 2012.

Wisconsin Public Service Corp
Rate Case for 2009-2010
Docket 6690-UR-119

On May 1, 2009, WPS filed a "re-opener" of this rate case to establish rates for 2010.   CUB will participate in this case to review how fuel and purchased power costs will be affected by power plant outages, especially the outage associated with the new Weston 4 power plant, which experienced chronic boiler tube clogging problems. 

The PSC issued an interim decision on December 22, 2009, in which electricity rates were held the same, and gas rates were increased by $13.5 million or 3.1 percent, which took effect on January 1, 2010.

A final decision from the PSC will likely be issued later in 2010, and will deal with issues surrounding Weston 4.

Wisconsin Public Service Corp
Fuel Rules Proceeding
Docket 6690-FR-101 and 102

Opened by the PSC on April 24, 2009, these cases will examine fuel costs for 2008 and 2009, and whether customers should receive a refund for overcollections.  The Great Recession has been accompanied by tremendous fuel price volatility, and sales of electricity and natural gas have declined considerably during the past year.  In addition, the new Weston 4 coal plant experienced chronic boiler tube clogging problems, forcing WPS to buy electricity on the spot market. 

The PSC issued an interim decision on December 22, 2009, in which electricity rates were held the same, and gas rates were increased by $13.5 million or 3.1 percent, which took effect on January 1, 2010.

A final decision from the PSC will likely be issued later in 2010, and will deal with issues surrounding Weston 4.

Wisconsin Public Service
WPS Rate Case for 2009-2010 Rates
Docket 6690-UR-119

On April 1, 2008, WPS filed an application to raise its electric and gas rates starting January 2009.  WPS asked to raise electric rates by $107 million, or 8% in 2009.  Gas charges (excluding the cost of the gas itself) would increase by 2%.  WPS stated that the electric rate increase was needed because of rising fuel costs, costs for new transmission projects, costs for a new wind farm, and costs related to the new Weston 4 power plant.

As a part of this case, CUB entered into an agreement with WPS to greatly increase investments in energy efficiency programs for customers.  WPS has agreed to ramp up its support for Focus on Energy over the next four years from about $12 million per year to $36 million per year.  WPS will also test new rate designs and load management opportunities for customers through 3-year pilots operating in three communities served by WPS; the communities have not been chosen at this time.  WPS has also agreed to knock off $2 million from rates charged to residential and commercial customers.  In exchange, WPS can "decouple" its sales of electricity from the profits it is authorized to collect. 

Due to rapidly falling natural gas prices, WPS, CUB, and other intervenors agreed to a settlement in which rates would remain unchanged for 2009.  The PSC accepted this settlement on December 23, 2008.  The Commission also accepted the agreement between WPS and CUB regarding decoupling, but the Commission added "conditions" to the agreement that may make it unworkable.  WPS and CUB will likely ask the PSC to reconsider these conditions.

Wisconsin Public Service
WPS Merger with Peoples Energy
Docket 9405-YI-100

On July 10, 2006, WPS Resources and Peoples Energy Corp. announced their intent to merge.

WPS Resources Corporation (WPSR) is the holding company that owns Wisconsin Public Service Corporation, a regulated utility that sells electricity and natural gas in the Green Bay area.  Peoples Energy Corporation (Peoples) is the holding company that owns two regulated utilities that sell natural gas in Chicago, namely Peoples Gas Light and Coke Company and North Shore Gas Company. 

In proceedings before the PSC, CUB objected to the merger because mergers rarely if ever provide benefits to the ratepayers of the utilities.  Like other utility holding companies that have proposed mergers, WPSR made promises that "synergy savings" resulting from more efficient utility operations would outweigh the costs of the merger and provide benefits to ratepayers.

During the proceedings, CUB pointed out that three-fourths of mergers fail to provide benefits to the acquiring company's shareholders, let alone ratepayers, and that "synergy savings" rarely provide any benefit to ratepayers.  Utility mergers almost always enrich utility executives while causing higher rates for utility ratepayers and the loss of jobs of utility workers.

In addition to criticizing the often fictional "synergy savings" promised by utility management, CUB raised concerns about the problems afflicting the utilities owned by Peoples. 

For starters, Peoples Gas Light and Coke Company and North Shore Gas Company had to refund $100 million swindled from their customers in a shady deal involving Enron Corporation.  

Next, the Peoples Gas utility has very old gas pipes, with some dating back to the Civil War.  Not only have there been explosions on the Peoples Gas system, but repairs and replacement of old pipes located under the streets of downtown Chicago will be very expensive, posing liability threats to its new Wisconsin owners. 

Unfortunately, the PSC approved the merger on February 8, 2007.

Wisconsin Public Service Corp
WPS Rate Case for 2007 Rates
Docket 6690-UR-118

On March 31, 2006, WPS filed a request for authority to increase its electric rates by $136.9 million, a 15.8% increase, and to increase its Wisconsin natural gas rates by $22.6 million, a 3.9% increase, to be effective January 1, 2007. 

WPS proposed to forego a request for a rate increase in 2008 if the PSC agreed to allow WPS to implement a two-year pilot "revenue stabilization mechanism" (RPS).  CUB argued that the PSC should reject the use of this mechanism unless WPS implements energy efficiency programs that encourage customers to save energy, which WPS was not willing to do.

CUB also argued that the RPS could allow WPS to receive profits as high as 16.6%, instead of the authorized 10.9%.  The Commission agreed with CUB and denied WPS's request for this revenue stabilization mechanism. Had this mechanism been approved, WPS could have earned excess revenues of $68 million.

On January 11, 2007, the PSC concluded the case and authorized a $56.7 million annual rate increase for WPS's electric operations, a 6.6% increase, and an $18.9 million rate increase for natural gas operations, a 3.8% increase, for 2007 rates.  Based in part on CUB's effort, the PSC reduced WPS's profits by $10 million.