January 29, 2013

Testimony of Charlie Higley
Executive Director Citizens Utility Board

Before the Senate Committee on Energy, Consumer Protection, and Government Reform
 

Electric Reliability, Compliance with Wisconsin’s Renewable Portfolio Standard, and the Strategic Energy Assessment

Good afternoon Chairman Cowles and members of the committee, and thank you for the opportunity to provide comments of the Citizens Utility Board on electric reliability, compliance with Wisconsin’s renewable portfolio standard, and the strategic energy assessment.

The Citizens Utility Board 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, telecommunications, and water utilities before the Legislature, regulatory agencies, and the courts.

 

Electric Reliability

The concerns about electric reliability that arose in the 1990s appear to have been dealt with. Since 2000, Wisconsin utilities and others have made nearly $3 billion in investments in new power lines throughout the state; at least $7.5 billion in new power plants of all kinds, including 3 large coal plants, 5 large natural gas plants, about a dozen renewable energy plants utilizing wind or biomass; and nearly $3 billion in pollution controls for existing coal-fired power plants. In sum, over $13 billion has been spent on Wisconsin’s electric system, much of it greatly improving the reliability of the electric system.

But these investments in reliability have come at tremendous cost: Wisconsin ratepayers are today paying some the highest electric rates in the Midwest, second only to Michigan, and higher than the national average. Fifteen years ago, Wisconsin ratepayers were paying some of the lowest rates in the Midwest. Though our electric system is more reliable, Wisconsin’s high electric rates make our businesses less competitive, and they make it hard for Wisconsin households to make ends meet, or have less disposable income to spend on other goods and services, with negative impacts on the Wisconsin economy.

Utilities have numerous proposals for additional investments in infrastructure: American Transmission Company plans to spend nearly $5 billion in the next 10 years on transmission lines in Wisconsin; several utilities are deciding whether to charge ratepayers hundreds of millions of dollars for retrofitting or replacing old coal plants.

These multi-billion dollar projects will cause rates in Wisconsin to continue to rise. To counteract those rising rates and to give people more ability to control their monthly utility bills, more investment should be made in energy efficiency. As the Legislative Audit Bureau report noted, benefits from Focus on Energy, Wisconsin’s statewide energy-efficiency and renewable resource program, exceeded costs by a ratio of 2.3 to 1. Deploying more energy efficiency reduces the need to build costly new infrastructure, which would help large and small businesses save money.

 

Compliance with the Renewable Portfolio Standard

Regarding compliance with the renewable portfolio standard (RPS), as the Public Service Commission reported on November 5, 2012, all Wisconsin electric providers are in compliance with their RPS requirements for 2011, and many have already achieved the increased percentage of renewable energy that will be required by 2015.

Since most utilities are expected to be in compliance with the RPS in 2015, CUB believes it is unnecessary to make changes to the RPS law at this time. In fact, if changes are made that reduce the requirement for renewable energy, it would penalize those utilities and their customers that have already made investments in renewable energy to meet the RPS.

Instead of changing the RPS law, the legislature should lift the cap on energy efficiency spending and allow the Public Service Commission to determine if increased energy efficiency efforts are in the public interest.

 

The Strategic Energy Assessment

CUB believes that the Strategic Energy Assessment (SEA) may not be perfect, but it contains useful data about Wisconsin’s electric system. As required by statute, Wis. Stat. § 196.491(2), the SEA compiles information about: electric rates in Wisconsin and the Midwest; projected demand for electricity; proposed power plants and power lines; proposed investments in energy efficiency and renewable energy. Having this information compiled in one place is very helpful for identifying activities that may have impacts on utility customers, especially their electric rates.

Recently, the Public Service Commission has been taking steps to streamline the document and increase its usefulness, and CUB supports the Commission in those efforts.

Thank you for this opportunity to provide comments on these topics. I would be happy to answer any questions.