May 13, 2011

RE: Please oppose legislation regarding Economic Development Rates.

Dear Members of the Wisconsin Legislature:

Legislation has been drafted, LRB-0715/1, that would undo century-old requirements that utility rates be just, reasonable and non-discriminatory.  Under the guise of "economic development," large industrial customers could now get significant discounts on their electric bills to be paid for by all other customers.  

CUB is opposed to this legislation, because these "economic development rates" will force residential and small business customers to pay higher rates to subsidize industrial customers that receive the discounted rate.

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 PSC 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.

LRB-0715/1 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 draft.

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 on the utility's other customers.  Shareholders of a utility offering a discount to large industrial customers don't pay a dime under this bill.  In fact, the utility will get a windfall if a new customer moves into the utility's territory or 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