Alliant/WPL Cases
Wisconsin Power & Light
CPCN and Fixed Financial Parameters for Nelson Dewey Coal Plant
PSC Docket 6680-CE-170
On February 7, 2007, WPL filed an application for authority to construct a 300 MW coal plant at its Nelson Dewey site on the shore of the Mississippi River near Cassville, and requested that the Commission approve fixed financing parameters to finance the project. The capital cost of the project is $777 million. This cost includes transmission upgrades and work to facilitate barge shipments of fuel. The cost of constructing the coal plant is estimated at $717 million.
CUB and Clean Wisconsin have joined forces to oppose WPL's application to the PSC. Now that Governor Doyle has announced his intention to address global warming in Wisconsin, it's time to stop building old-technology coal plants. Instead of reducing global warming emissions, WPL's proposal will more than double carbon dioxide pollution from the Nelson Dewey site. According to the Environmental Protection Agency, WPL's existing coal burners at the Nelson Dewey site now emit over 1.7 million tons of global warming pollutants into the atmosphere each year. If the state allows WPL to build its proposed plant, a projected 3.8 millions tons of global warming pollutants would be released annually from the site.
Investing in outdated coal technology now means higher rates in the future because of carbon regulations that will certainly increase the cost of using coal. When we commit to burning coal we lose the opportunity to invest in Wisconsin as a leader in clean energy technology. The technology chosen by WPL for its proposed power plant emits the highest global warming pollutants of any technology available. From 1990 to 2005, Wisconsin's global warming emissions increased by 25%. Coal power plants being constructed in Milwaukee and Wausau will increase Wisconsin's global warming pollutants by an additional 10%. The proposed Nelson Dewey plant would further increase global warming emissions in Wisconsin.
There are modern, proven technologies being used today that emit fewer global warming emissions while protecting our health and boosting our economy. Wisconsin's State Energy Priority Law lists coal dead last as an option. Wisconsin shouldn't settle for one of the worst technologies available to provide power for Wisconsin's homes and businesses. Wisconsin must focus on energy efficiency, conservation, renewable energy, and clean fuels to meet our state's energy needs.
On December 19, 2007, the PSC determined that WPL has submitted a complete application. Therefore the PSC will prepare an Environmental Impact Statement, hold hearings to gather evidence, and decide the case by the end of 2008.
Wisconsin Power & Light
Fixed Financial Parameters for the Cedar Ridge Wind Farm
PSC Docket 6680-CE-171
On December 12, 2006, the Commission issued a notice of proceeding to address WPL's request to use fixed financial parameters to finance the Cedar Ridge Wind Farm project. The most fundamental aspect of the Company's proposal appears to be the degree to which the "fixed" nature of the capital costs to be decided in this case are effectively guaranteed. The Company's testimony suggests that it recover its fixed capital costs in rates throughout the time the plant is being constructed until one year after commercial operation begins. After that time the capital costs would be "trued-up" with actual costs. This of course would be a risk reducing aspect of this method of ratemaking. If the Company expects to ensure its recovery of all capital costs for this project then its equity risk is significantly reduced below that of normal utility common equity. CUB will provide expert testimony that analyzes the reasonableness of WPL's proposal for recovery of its capital costs for the wind farm; WPL's analysis of the cost of equity based on treatment of the wind farm as a competitive stand-alone generation asset rather than as part of an integrated utility - which is the way the facility will be operated; and the ways in which WPL's proposal to utilize fixed financial parameters and capital cost rate-making principles for the wind farm would negatively impact WPL's residential customers.
Intervenor Direct Testimony (Confidential, Redacted) filed February 14, 2007
Intervenor surrebuttal testimony filed February 27, 2007
CUB's Initial Brief filed March 19, 2007
CUB's Reply Brief filed March 29, 2007
Wisconsin Power and Light
WPL Rate Case 2007 Test Year
Docket 6680-UR-115
On March 17, 2006, WPL filed an application with the Commission requesting authority to increase its electric utility rates by $87.6 million, an 8.58 percent increase, and to increase its natural gas utility rates by $8 million, a 2.7 percent increase, to be effective January 1, 2007. In supplemental testimony WPL revised its request and sought a $164.7 million electric increase, or 17.8 percent. On January 19, 2007, the Commission authorized an electric rate increase of $36.2 million, a 3.9 percent increase, and a $1.9 million rate decrease for natural gas operations, a .59 percent decrease for the test year ending December 31, 2007.
Fuel Costs
As an integral part of WPL’s estimate of fuel costs the utility uses LMPs at the Cinergy Hub and adjusts those LMPs to reflect the comparable price at the Alliant East load zone. CUB’s expert witness argued that the basis difference values for October through December 2005 should be removed from the calculation of historical averages for the period April 2005 through August 2006 since they are unusually high due to the impact of the hurricanes in the fall of 2005. CUB argued that it was unlikely that this scenario would be repeated in the 2007 test year and that WPL’s projected fuel costs should be reduced by approximately $2.3 million. The Commission agreed with CUB’s argument, but reduced WPL’s fuel costs by $1.5 million. This amount still represents a dramatic savings for WPL’s customers.
Return on Equity
CUB recommended an ROE no higher than 10.4%. WPL requested 11.5%. The Commission approved 10.8%. The Commission’s decision results in a $7 million electric revenue requirement difference between what WPL requested and what the Commission authorized, and a $1.3 million gas revenue requirement difference between what WPL requested and what the Commission authorized.
Should a debt equivalent be imputed in the financial capital structure for WPL’s Sheboygan Falls Power Plant?
The Commission supported CUB’s recommendation to exclude imputation of $119 million in financial capital structure for Sheboygan Falls lease obligation. If the Commission did not exclude imputation Staff’s revenue requirement would have been increased by $8 million.
What is the appropriate revenue allocation to the customer classes?
CUB recommended a lower than average revenue allocation to the residential class and the Commission approved a less than average increase for residential customers, a higher than average increase for commercial customers, and an average or slightly higher than average increase for industrial customers. The overall increase in electric rates will be between 3% to 4%.
Should the Commission require WPL to develop new rate offerings for its small-use customers?
CUB’s expert witnesses recommended that WPL be required to develop new rate offerings for small use customers and the Commission unanimously agreed that WPL should develop 1 or 2 new rate offerings for consideration in the next rate case.
Should the Commission approve a special rate for ERCO Worldwide?
ERCO owns a chemical manufacturing plant in Port Edwards and buys electricity from WPL. ERCO was asking for lower electricity rates so that they could invest in equipment that would reduce emissions of mercury from its Port Edwards facility. ERCO asked the PSC to approve a special contract with WPL to lock in a low electric rate that would only increase 4 percent per year, whereas ERCO’s electricity rates have increased on average 10% per year since 1997. This contract would have forced WPL’s residential and business customers to subsidize ERCO. Also in this proceeding, WPL had asked the PSC to approve a special electricity rate for ERCO that would force other WPL customers to subsidize ERCO by at least $23 million over the next ten years. CUB expert witness and legal team argued that the requests for special electricity rates for ERCO would not only be illegal, but if granted, it would set a bad precedent that would encourage other companies to look for handouts from ratepayers. CUB argued that it was the responsibility of ERCO’s shareholders to pay for pollution control equipment, and there is no legal basis for WPL’s customers to pay for those costs. The Commission voted unanimously to deny ERCO’s request for a special utility rate and also denied WPL’s proposed multi-million subsidization of ERCO. CUB appreciates the Commission’s decision to defend 100-year-old principles of utility regulation that protect ratepayers from discriminatory deal making between utilities and powerful companies.
This case has been completed.
Intervenor Direct Testimony (Lee Smith, Confidential, Redacted) filed September 12, 2006
Intervenor (George Edgar, Wayne DeForest) Rebuttal Testimony filed September 22, 2006
Intervenor (George Edgar, Wayne DeForest) Surrebuttal Testimony filed October 3, 2006
Intervenor Surrebuttal Testimony (Lee Smith, Confidential, Redacted) filed October 11, 2006
Intervenor (George Edgar) Surrebuttal Testimony filed October 11, 2006
CUB's Initial Brief (Confidential, Redacted) filed November 9, 2006
CUB's Reply Brief filed November 29, 2006
