Alliant/WPL Cases
Wisconsin Power & Light
Rate Case for 2011
Docket 6680-UR-118
In the spring of 2010, WPL will likely file a request with the Public Service Commission to raise electric and gas rates starting in January 2011. CUB intends to intervene in this case to argue for reasonable rates.
Wisconsin Power & Light
Economic Development Rate
Docket 6680-GF 126
On November 13, 2009, WPL filed a request with the PSC for approval of an economic development rate (EDR) for industrial customers, in which certain industrial customers would be able to pay lower prices for electricity.
CUB has long opposed EDRs because they violate core principles of utility regulation, namely (1) EDRs are inherently discriminatory, in which certain customers receive service at lower rates than other customers, and (2) EDRs allow a customer to pay a rate lower than what the customer should pay to cover the costs of receiving service. In addition, since EDRs lower the price of electricity, they encourage customers to use more electricity, exactly opposite of efforts to save energy.
CUB submitted comments to the PSC noting CUB's objections to EDRs on February 17, 2010. The PSC held an open meeting on February 19, and at least two of the three commissioners seemed to support the establishment of economic development rates. On March 16, CUB requested that the PSC hold a "contested case" hearing, which usually must be held anytime rates are changed (contested case hearings allow CUB and other parties to provide expert testimony, to cross-examine witnesses, and to file legal briefs on policies and legal issues). This case will likely conclude by June 2010.
Wisconsin Power & Light
Rate Case for 2010
Docket 6680-UR-117
On May 8, 2009, WPL filed a request to raise electric rates by $85.5 million or 9.2 percent and natural gas rates by $6.2 million or 2.6 percent starting in January 2010. On July 24, 2009, WPL updated its request to increase electric rates by $103 million or 11.0 percent and natural gas rates by $6.7 million or 2.8 percent.
CUB intervened in the case and reviewed the following issues: the utility's level of profit; cost-of-service studies, class revenue requirement allocations, and rate designs. CUB also argued that WPL should not be allowed to recover "pre-certification" and "pre-construction" costs associated with the proposed Nelson Dewey power plant, which was rejected by the PSC in November 2008.
The PSC issued its decision in this case on December 18, 2009. The PSC approved an increase in electric rates of $58.6 million (6.3 percent) and an increase in gas rates of $5.6 million (2.4 percent).
The PSC agreed with CUB and reduced WPL's rates by $18.4 million, including: a reduction of $2.6 million and $9.3 million for unreasonable pre-certification and pre-construction costs for the never-built Nelson Dewey power plant; and a reduction of $6.5 million by lowering WPL's return on equity (profits) from 10.6 percent to 10.4 percent.
The PSC also agreed with CUB to require WPL to use electric rates for residential customers with lower fixed charges and higher volumetric charges, which provide incentives to customers to save electricity. The PSC also agreed with CUB and did not increase the credit for industrial customers willing to interrupt their electricity service for emergencies.
Wisconsin Power & Light
Retrofit of Columbia 1 & 2
Docket 05-CE-138
On April 2, 2009, WPL and co-owners Madison Gas & Electric and Wisconsin Public Service Corp. applied for permission to add pollution controls at a cost of at least $627 million to the Columbia power plant, located near Portage. Columbia consists of two, 500 megawatt coal-fired generators and was built in the early 1970s. CUB is intervening in this case along with Clean Wisconsin to make sure the retrofit costs are reasonable. This case will likely conclude by June 2010.
Wisconsin Power & Light
WPL Retrofit of Edgewater 5
Docket 05-CE-137
On November 14, 2008, WPL and co-owner We Energies applied for permission from the Commission to add pollution controls to Edgewater Unit #5, a 430 megawatt coal-burner on Lake Michigan near Sheboygan. The pollution controls would cost a minimum of $153 million. CUB and Clean Wisconsin will work together in this case to make sure the cost of the retrofit is reasonable, as well as seeing if it would make more sense to shut the unit down due to the increasing costs for global warming and air pollution controls on coal plants.
Wisconsin Power & Light
WPL Bent Tree Wind Farm
Docket 6680-CE-173
On June 6, 2008, WPL requested authorization from the Commission to build a 200 megawatt wind farm in Minnesota, at an expected cost of $500 million. The Commission issued an interim order agreeing with WPL that, since the wind farm would be built in Minnesota, WPL would not need to receive a "certificate of public convenience and necessity," (CPCN) which is required for any proposed power plant of 100 megawatts or larger, or any high-voltage power line. CPCNs require a more rigorous economic and environmental review, and CUB believes that a project of this size and cost deserves the highest level of scrutiny by the PSC. CUB, Clean Wisconsin, and RENEW Wisconsin are working together in this case to determine if there are more economical and environmentally acceptable alternatives to WPL's proposal.
Wisconsin Power & Light
WPL Rate Case for 2009-2010 Rates
Docket 6680-UR-116
On February 22, 2008, WPL filed an application to raise its electric and gas rates starting January 2009. WPL asked to raise electric rates by $144 million, or 9% in 2009 and 4% in 2010. Gas charges (excluding the cost of the gas itself) would decline by 1%. WPL stated that the electric rate increase is needed because of rising fuel costs, costs for new transmission projects, costs for a new wind farm, and costs related to the Nelson Dewey power plant (which, at the time, had not been approved, and was later rejected by the PSC. See next case below).
CUB intervened in the case to urge the PSC and the utility to reduce rates for residential customers, who have been paying too much when compared to commercial and industrial customers. CUB also urged the utility to offer new rate options so that consumers could reduce their energy use and save money on their energy bills.
Due to rapidly falling natural gas prices, WPL, CUB, and other intervenors agreed to a settlement in which rates would remain unchanged for 2009. The PSC accepted this settlement on December 23, 2008.
Wisconsin Power & Light
Retrofit of Nelson Dewey 1 & 2
Docket 6680-CE-172
On January 15, 2008, WPL updated its application for authorization from the PSC to add pollution controls to units 1 and 2 at the Nelson Dewey power plant near Cassville. CUB has intervened to make sure the cost of the retrofit would be reasonable, or whether the units should be shut down. WPL hasn't made any filings in this docket since June, 2008.
Wisconsin Power & Light
WPL Nelson Dewey Power Plant
Docket 6680-CE-170
On February 7, 2007, WPL filed an application for a construction permit for a 300 MW coal plant at its Nelson Dewey site on the shore of the Mississippi River near Cassville. The plant and related facilities would cost at least $1.26 billion, up from Alliant's original estimate of $777 million. CUB and Clean Wisconsin worked together to oppose this power plant, because it would increase Wisconsin's emission of global warming pollution, and would threaten ratepayers with higher rates due to the likelihood that global warming pollution will be regulated in the future.
The Commission decided the case on November 11, 2008, unanimously rejecting WPL's proposed power plant. The Commission agreed with CUB and Clean Wisconsin that the plant would be too expensive and too polluting compared to alternatives, such as purchasing power from other utilities or expanding existing plants that burn natural gas. This was a huge victory for CUB and Clean Wisconsin; this was the first time the Commission rejected a utility proposal for a large power plant.
Wisconsin Power & Light
WPL Cedar Ridge Wind Farm
Docket 6680-CE-171
On September 13, 2006, WPL filed an application for authority to construct a 98 megawatt wind farm in Fond du Lac County. WPL wants to finance the project using a new (but not improved) option, in which the "financial parameters," such as the return on equity, are fixed for the life of the project.
This financing option, known as "fixed-financial parameters," is another assault on traditional regulation. With traditional regulation, regulators can adjust a utility's return on equity on the utility's invested capital every several years in order to maintain a balance between the interests of ratepayers and shareholders. If interest rates or equity returns change significantly, or if the utility's job performance is good or bad, regulators can reward or punish or hold harmless shareholders by adjusting the return on equity. Regulators have used this approach for at least 100 years.
CUB is opposed to this fixed financial parameters approach, which was recently passed into law despite our objections, and we are urging the commission to reject its use in this proceeding. With a ruling on May 10, 2007, the PSC ordered that WPL could use the new financing mechanism, but that the return on equity would be 10.5%, not the 12.9% requested by the utility. WPL ultimately chose to the traditional approach and put the plant in ratebase, which is the outcome that CUB wanted.
Wisconsin Power & Light
WPL Rate Case for 2007 rates
Docket 6680-UR-115
On March 17, 2006, WPL filed an application with the PSC requesting authority to increase its electric utility rates by $87.6 million, an 8.6% increase, and to increase its natural gas utility rates by $8 million, a 2.7% increase, to be effective January 1, 2007. Later in 2006, WPL revised its request and sought a $164.7 million electric increase, or a 17.8% increase.
During the case, CUB's expert witness argued that WPL was overestimating the costs for fuel for 2007. The PSC agreed with CUB and reduced WPL's request by $1.5 million.
CUB also argued that WPL should earn a rate of return (profit) of no more than 10.4%, whereas WPL was asking for 11.5%. The PSC approved a profit rate of 10.8%, which will save ratepayers $7 million from what WPL was asking for. Thankfully, the PSC has lowered WPL's profit rate over the past few years.
The PSC also supported CUB's recommendation to exclude an imputation of $119 million in the capital structure for the lease underlying new power plants built in Sheboygan Falls in 2005, for a ratepayer savings of $8 million.
On January 19, 2007, the PSC authorized an electric rate increase of $36.2 million, a 3.9% increase, and a $1.9 million rate decrease for natural gas operations, a 0.6% decrease for 2007 rates. CUB's efforts saved WPL ratepayers at least $15 million.
WPL has received 7 rate increases since December 2003 for a total $202 million, roughly a 22% increase in three years.
As part of the WPL rate case, ERCO Worldwide, Inc., which owns a chemical manufacturing plant in Port Edwards and buys electricity from WPL, asked 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% each year, whereas ERCO's electricity rates have increased on average 10% each 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 WPL customers to subsidize ERCO by at least $23 million over the next ten years.
CUB's legal team, led by Curt Pawlisch of Cullen Weston Pines & Bach, argued that the requests for special electricity rates for ERCO would not only be illegal, but if granted, 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 that it would be illegal for WPL's customers to subsidize those costs.
The Commission voted unanimously to deny ERCO's request for a special utility rates and also denied WPL's proposed $23 million dollar subsidy for ERCO. CUB appreciates the PSC's decision to defend 100-year-old principles of utility regulation that protect ratepayers from discriminatory deal making between utilities and powerful companies.
