December 1, 2011

MADISON - The Public Service Commission today approved new electric and natural gas rates for Madison Gas & Electric Company, which will take effect on January 1, 2012.  The Citizens Utility Board participated in the case, and made suggestions that reduced the rate increase by more than $14 million.

MGE had sought an increase in electric rates for 2012 of $35.0 million, or 9.7 percent; and an increase in the rates for the delivery of natural gas of $838,000 or 0.4 percent (the natural gas itself is purchased by the utility in open markets and the cost is passed onto customers). The PSC approved an increase in electric rates of about $15 million, or 4 percent, and the PSC approved the increase in gas delivery costs.

As part of its request to increase electric rates, MGE sought $14.5 million to pay for complying with the Cross-State Air Pollution Rule, a new air pollution regulation issued by the U.S. Environmental Protection Agency that takes effect in January 2012.  The regulation requires utilities to reduce emissions of sulfur and nitrogen oxides, which cause acid rain and smog, and damage human health and the environment.

CUB and other parties urged the PSC not to increase electric rates for compliance with the air pollution rule, but rather to require MGE to track the costs of complying with the rule, and to recover these costs from ratepayers in the future.  The PSC agreed with CUB, which resulted in a savings of $14.5 million.

Though all customers will see an increase in electric rates, the PSC decided to raise the rates for residential and commercial customers in order to pay for a discount to Airgas Merchant Gases, an industrial customer of MGE that distributes industrial, medical, and specialty gases.  CUB is disappointed in this decision, because it will force residential and small commercial customers to subsidize rates for Airgas.

“The PSC made some good decisions but also some bad ones regarding electric rates for MGE customers,” said Charlie Higley, CUB executive director.  “The PSC appropriately reduced rates regarding compliance with air pollution rules, but made a mistake in forcing residential customers to pay for discounted rates to Airgas.  All customers are hurting in this economy, and it’s simply unfair to force small customers to pay higher rates to provide subsidies to large customers.”

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The Citizens Utility Board of Wisconsin is a member-supported, nonprofit organization that advocates for reliable and affordable utility service. CUB represents the interests of residential, farm, and small business customers of electric, natural gas, and telecommunication utilities before the Legislature, regulatory agencies, and the courts.