December 20, 2007

MADISON - The Citizens Utility Board commends the Public Service Commission of Wisconsin for substantially reducing the size of the electric rate increase that We Energies customers will have to pay starting in January 2008.

The three PSC commissioners today decided more than 100 issues involved with setting electric and natural gas rates for We Energies, which will take effect in 2008 and 2009. We Energies sought an increase of 7.5 percent in 2008 and an additional increase of 7.5 percent in 2009. A preliminary estimate based on today?s action by the PSC is that electric rates will increase by 3.5 percent in 2008 and another 3.5 percent in 2009.

Importantly, the PSC agreed with CUB that We Energies should not be allowed to charge ratepayers for $22 million associated with an outage of the Point Beach Nuclear Power Plant during 2005. In general, when utilities shut down plants for maintenance, they need to purchase power from other utilities to make up the difference. For this particular outage, the PSC agreed with CUB that We Energies was responsible for causing the outage to last longer than it should have, which resulted in We Energies purchasing an additional $22 million-worth of electricity. The outage lasted longer than planned because We Energies had not taken action for 23 years to comply with certain regulations of the U.S. Nuclear Regulatory Commission.

In addition, the PSC refused to allow We Energies to keep $70 million in proceeds from the sale of the Point Beach Nuclear Power Plant, which was sold to FPL Energy earlier this year. Instead, the PSC ordered We Energies to return this $70 million to ratepayers.

Lastly, the PSC reduced the level of profit sought by We Energies, which will result in a savings to ratepayers of $14 million. CUB has been urging the PSC to reduce utility profits for many years.

Fortunately for ratepayers, the PSC has been reducing utility profits for the past three years or so, although they still remain higher than utility profits in other states.

"Although customers of We Energies will see higher electric rates in 2008, the PSC made good decisions today that will substantially reduce the size of the increase," said Charlie Higley, CUB executive director.

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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 regulatory agencies and the courts.