May 25, 2011

The Honorable Mark Honadel
Chairman, Assembly Committee on Energy and Utilities
Wisconsin State Capitol
Madison, Wisconsin

RE: Testimony regarding AB 145, relating to electric rates to promote economic development.

Dear Chairman Honadel:

Thank you for this opportunity to testify regarding AB 145, relating to electric rates to promote economic development.

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, and telecommunication utilities before the Legislature, regulatory agencies, and the courts.

CUB does not support AB 145 because it would undo century-old requirements that utility rates be just, reasonable and non-discriminatory.  Under the guise of economic development, large industrial customers could get significant discounts on their electric bills to be paid for by all other customers.  

CUB is opposed to this legislation, because these discounted rates will force residential and small business customers

to pay higher rates to subsidize industrial customers that receive the discounted rate.  This bill would create a tax to be paid for by residents and small businesses, with the tax revenues handed out to large industrial customers and utility shareholders.

Forcing customers to pay higher rates while others receive discounts is inherently unfair, and has been illegal under Wisconsin law for more than 100 years.  For example,  utilities cannot give discounted rates to one set of customers when other customers receive similar service and do not receive the discount.  Wis. Stat. 196.60, created in 1907.  If the Public Service Commission finds that any rate is unjustly discriminatory or preferential, it must determine and order a just and reasonable rate to be used instead.  Wis. Stat. 196.37, also created in 1907.

AB 145 turns a blind eye to these statutes and carves out exemptions for these unjust, unreasonable, and discriminatory rates.  See p. 6, lines 3-4 of the bill.  Though allowing discriminatory rates for one subset of customers is bad enough, the legislation also allows the utilities to increase their profits at the expense of other customers.  Page 6, lines 5-9 of the bill forces the cost of a discount onto the utility's other customers.  In fact, the utility will get a windfall if a new customer moves into the utility's territory or an existing customer increases its energy usage because of the discounted rate.  These extra funds are pure profit for the utility.

All customers are hurting in this recession.  Why is it fair to raise rates for residents and small businesses so that discounts can be given to others, and utilities can make extra profits?  We urge you to oppose this legislation, which will cause rates to increase for residential and small business customers.

Sincerely,

Charlie Higley
Executive Director
May 25, 2011