CUB Victories
CUB Wins!
2009
CUB Saves Ratepayers $38 Million
During 2009, three utilities sought increases in rates for electric and gas service to take effect in January 2010. CUB intervened in these rate case proceedings, and was able to reduce rates by $38 million.
Two utilities asked permission from the Public Service Commission (PSC) to build a wind farm in Colombia County and a power plant in Ashland that will use biomass from forests as fuel. CUB intervened in these cases to make sure these power plant proposals were good deals for Wisconsin's ratepayers and environment.
We Energies
On March 13, 2009, We Energies (WE) filed an application with the PSC to increase electric rates by 2.8 percent and natural gas rates by 4.6 percent, with the new rates taking effect on January 1, 2010. On July 3, 2009, We Energies modified its request to raise electric rates by a total of $127 million, or 4.9 percent.
CUB intervened in the case and reviewed WE's requests for recovery of costs related to burning excess coal, costs associated with the Midwest Independent Transmission System Operator (MISO), WE's off-balance sheet obligations, rate allocation and design, and whether WE had too many power plants on-line, which could unnecessarily cause electric rates to be higher than reasonable.
The PSC issued its decision regarding rate increases for We Energies on December 18, 2009. The PSC approved an increase in electric rates of $85.8 million (3.4 percent) and a decrease in gas rates of $2.1 million (0.35 percent).
The PSC agreed with CUB and reduced We Energies rates by $17.3 million, including: a reduction of $2.3 million for unnecessarily burning excess coal; a reduction of $3.8 million for extra costs associated with MISO; and a reduction of $11.2 million by lowering WE's return on equity (profits) from 10.75 percent to 10.4 percent.
The PSC also agreed with CUB and will open an investigation to address the fact that Wisconsin utilities have too many power plants on-line, a situation known as "excess capacity."
Wisconsin Power & Light
On May 8, 2009, Wisconsin Power & Light (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: WPL'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.
Madison Gas & Electric
On April 29, 2009, Madison Gas & Electric filed a request to raise electric rates by $15.9 million or 4.5 percent, and natural gas rates by $4.4 million or 2.3 percent. The rate increases would take effect in January 2010.
CUB intervened in this case and reviewed the utility's level of profit and the design of rates for residential customers.
The PSC issued its decision in this case on December 22, 2009. The PSC approved an increase in electric rates of $11.9 million (3.3 percent) and a decrease in gas rates of $1.5 million (0.74 percent).
The PSC agreed with CUB and reduced MGE's return on equity (profits) from 10.8 percent to 10.4 percent, a savings to customers of $2 million. In addition, the PSC also agreed with CUB and reduced rates by $78,000 for lobbying expenses that were incorrectly charged to ratepayers.
The PSC also agreed with CUB to require MGE to use electric rates for residential customers with lower fixed charges and higher volumetric charges, which provide incentives to customers to save electricity.
Xcel Energy (also known as Northern States Power-Wisconsin), Gasifier at Bayfront Power Plant
On February 23, 2009, Xcel filed an application to add a biomass gasifier at its Bayfront facility near Ashland so that it can burn biogas instead of coal.
CUB intervened to make sure the cost of the project was reasonable. During the proceeding, CUB discovered a study written by a consultant hired by Xcel that concluded that the proposed project may not work at the size and scope envisioned. CUB brought these concerns to light in legal briefs submitted to the PSC.
The PSC issued an approval for the project on December 22, 2009. Although the PSC determined that the project was technically feasible, the PSC agreed with CUB to limit the cost-overrun collar to 10 percent, rather than 20 percent sought by Xcel.
In addition, the PSC agreed with CUB and did not provide Xcel with a guarantee of cost recovery should cost overruns exceed 20 percent and the PSC orders Xcel to cease construction. These actions will help protect ratepayers from paying millions of dollars for possible cost overruns, or for a project that may not work.
2008
CUB Saves Ratepayers Over $200 Million
During 2008, two utilities sought to increase electric and gas rates for 2009 by $200 million. CUB intervened and reached agreements with the utilities that kept electric and gas rates essentially unchanged for 2009, avoiding the $200 million increase.
In addition, CUB fought against the proposal by Wisconsin Power & Light (also known as Alliant Energy) to build a new coal-fired power plant near Cassville. The Public Service Commission agreed with CUB that the plant would be too expensive and too polluting compared to alternatives, and rejected the proposal in November 2008. With the rejection of this power plant proposal, ratepayers of WPL will save hundreds of millions of dollars over the next 25 years.
WPL and WPS: No Rate Increase for 2009
For the first time since 1996, electric rates for customers of Wisconsin Power & Light and Wisconsin Public Service did not go up with the start of the New Year. Rates for natural gas even went down a small amount.
WPL
On February 22, 2008, WPL filed an application to raise its electric and gas rates starting in 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 increases were 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 was later rejected by the PSC).
CUB intervened in the case, and urged 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 customers could reduce their energy use and save money on their energy bills.
Due in part 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.
WPS
A similar set of issues faced Wisconsin Public Service Corp., which filed an application on April 1, 2008 to raise its electric and gas rates starting in January 2009. WPS had asked to raise electric rates by $107 million, or 8% in 2009. Gas charges (excluding the
cost of the gas itself) would increase by 2%. WPS stated that the electric rate increases were needed because of rising fuel costs, costs for new transmission projects, costs for a new wind farm, and costs related to the new Weston 4 coal-fired power plant.
Last fall's rapidly declining natural gas prices affected WPS, too. In December, WPS, 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.
Combined, the settlements between CUB, WPS, WPL, and other intervenors saved ratepayers at least $200 million, according to the Public Service Commission.
PSC Says No to Coal!
For the first time since the 1970's, on November 11, 2008, the Public Service Commission rejected a utility proposal for a large power plant, coal-burner proposed by Wisconsin Power & Light, a utility subsidiary of Alliant Energy. The plant would have been located next to the existing Nelson Dewey power plant on the shore of the Mississippi River near Cassville.
CUB and Clean Wisconsin submitted testimony and legal briefs showing that the proposed plant would have increased Wisconsin's emissions of global warming pollution, and would have forced ratepayers to pay much higher electric rates. Staff of the PSC raised similar concerns in their testimony.
The plant would have cost at least $1.26 billion. When WPL first applied to build the plant, the estimate was $777 million; the proposed plant nearly doubled in price in less than two years. The proposed plant would have raised rates by more than $800 million over 25 years when compared to alternatives, such as purchasing power from other utilities or expanding existing plants that burn natural gas.
2007
Regulatory Victories
CUB Saves We Energies’ Ratepayers $106 Million
In the spring of 2007, We Energies applied for permission from the PSC to increase electric rates for 2008 by $712 million or 28 percent, the largest single-year increase in the utility’s history.
CUB argued that We Energies should not be allowed to charge ratepayers $22 million for electricity it had to buy in 2005 while making repairs to the Point Beach Nuclear Power Plant, should not be allowed to keep $70 million in proceeds from the sale of the Point Beach Nuclear Power Plant, and that the level of profit sought by We Energies should be reduced, saving ratepayers $14 million. CUB has been urging the PSC to reduce utility profits for many years, and thankfully, the PSC has been reducing utility profits for the past three years, although they still remain higher than utility profits in other states.
On December 20, 2007, the PSC issued its decision: starting in January 2008, electric rates would only increase by 3.4 percent. Rates will also increase another 3.5 percent in January 2009.
CUB Helps Save Xcel Ratepayers $18 million
In June 2007, Xcel Energy (also known as Northern States Power) applied to the Public Service Commission for permission to raise 2008 electric rates by $67 million, or 14 percent.
Given the huge increase sought by Xcel, CUB urged the utility and the PSC to adopt rate design options that would allow residential customers to better control their electricity usage and bills while also reducing costs for the utility. CUB also testified that customers should receive value from Xcel’s proposed installation of “automated meters,” which can be read by a computer instead of by a person. Automated meters can provide information to customers regarding the electricity they are using, and how much it costs, allowing customers to change their usage and lower their utility bills. Though the PSC decided that Xcel could install the automated meters, Xcel must work with CUB’s experts to develop options so that customers can reduce their electricity use and lower their bills.
CUB objection to an increase in the monthly electric “customer charge” from $8 to $10 saved residential ratepayers $4.5 million. CUB also requested a reduction in profits collected from customers. The PSC agreed, saving customers about $1.6 million.
The PSC decided Xcel’s rate hike in early January 2008, and raised 2008 electric rates by $39 million, or 8 percent. The smaller-than-asked-for increase meant customers saved about $18 million.
CUB Saves MGE Ratepayers $2.4 Million
In May 2007, MGE applied to the Public Service Commission for an electric rate increase starting in January 2008 of almost $20 million, or about 6 percent.
CUB challenged MGE’s request to increase rates, arguing that MGE should develop new rate options that would allow customers to better control their electricity usage and costs. In its December order, the PSC directed MGE to work with CUB to investigate innovative residential rate options that would promote energy conservation. CUB raised concerns that, under MGE’s proposal, residential customers would pay more than their fair share of utility costs, while commercial and industrial customers would pay less. The PSC agreed with CUB and reduced the size of the rate increase for all residential customers by $1.4 million. CUB also asked the PSC to reduce MGE’s profits, and the PSC agreed; reducing profits by about $1 million.
In mid-December 2007, the PSC issued its order approving an electric rate increase of $16 million (almost 5 percent) for rates that took effect in January.
Legislative Victories
Wisconsin Safe from More Nuclear Power
AB 346, introduced last year, would have repealed Wisconsin’s so-called “nuclear moratorium” law, Wis. Stat. 196.493. The Wisconsin Legislature concluded its regular business on March 13 without repealing the nuclear moratorium.
The nuclear moratorium law doesn’t ban the construction of nuclear plants. It simply requires that several criteria be met before the Public Service Commission can authorize the construction of a nuclear plant. Two of the most important criteria are that:
• a waste repository is available for radioactive waste created by Wisconsin reactors, and;
• a nuclear plant is economically advantageous to ratepayers in comparison to alternatives.
CUB believes that unless nuclear power can pass these simple requirements, nuclear power plants should not be built in Wisconsin.
Telephone Deregulation on Hold
The Wisconsin Legislature concluded its regular business on March 13 without passing legislation that would have deregulated local phone service.
AB 561 and SB 285 were introduced last year, which would have gutted the laws that regulate local phone service. Had these bills passed, local phone companies could have charged customers using “plain old phone service” any price they wanted.
In response to this legislative activity, the Public Service Commission has opened an investigation to determine whether Wisconsin’s telephone regulations should be changed. CUB will be participating in this investigation, which will likely conclude by the end of 2008. We’ll be asking the Commission “can you hear us now?” as we make the case that consumers still need protection from price gouging and poor service from telephone companies.
Court Victory
CUB vs. WPL
Court sides with CUB; upholds prohibition of "retroactive rate making"
CUB sided with the PSC in a suit brought against the Commission by Wisconsin Power & Light (WPL) regarding interpretation of the fuel rules. WPL took the PSC to court when the PSC denied the utility a rate increase based on increases in fuel costs associated with the shutdown of the Kewaunee Nuclear Power Plant. The PSC originally ruled that to have granted the increase would have violated the long-stranding prohibition against retroactive rate making. WPL sought to have the PSC decision overturned. CUB entered the case in support of the PSC position. The courts sided with CUB and the PSC and ruled against WPL.
2006
Legislative Victories
SB459/Act 141
Smart Energy bill signed into law
On March 17 2006, the Smart Energy bill (SB459) was signed into law by Wisconsin Governor Jim Doyle as Wisconsin 2005 Act 141. Act 141 will strengthen Wisconsin's statewide energy efficiency program known as Focus on Energy. Over the past several years nearly $100 million has been diverted from Focus on Energy to reduce the state's budget deficit, even though these funds were collected from utility ratepayers specifically for energy efficiency efforts. These budget raids created an unfair tax on utility customers. Act 141 will protect the funds for Focus on Energy, which means that Wisconsin citizens can receive all the benefits of making our homes and businesses more energy efficient: Each dollar invested in energy efficiency returns nearly 6 dollars to Wisconsin in economic and environmental benefits.
This is a tremendous victory for Wisconsin ratepayers and environment. CUB's top legislative priority was to pass SB 459, the energy bill based on the recommendations from Governor Doyle's Task Force on Energy Efficiency and Renewables, on which CUB participated. This important piece of legislation is a critical component to a strong and stable energy future in Wisconsin.
CUB commends the Governor and all the state Legislators who worked to make Act 141 law.
---
SB 518
Bad bill dies in session
CUB fought to protect consumers' right to seek refunds by opposing SB 518 is a bill that would have reduced significantly Wisconsin consumers' rights to seek refunds of sales taxes wrongfully collected by retailers. (The identical bill in the Assembly was AB 968). The bill applied to any class action lawsuit seeking any tax refunds. It would require consumers who were charged an incorrect amount of sales tax to apply for a refund with the State Department of Revenue (DOR) rather than with the seller. The bill also prohibited class action lawsuits against the state or any other party if the suit includes the refund of any tax administered by the state.
The portions of SB 518 that applies to class actions were retroactive; that is, they applied not only to lawsuits filed in the future, but to all currently pending class action lawsuits. It would also prohibit consumers from filing class actions that may be their only recourse for collecting refunds that are owed them. Under current state law, businesses, not customers, are responsible for collecting and paying the right amount of sales tax to the state. If a customer wants to challenge the amount of sales tax, he or she can address the concern in a variety of ways, including making a claim directly against the business that overcharged the consumer or by participating in a class action lawsuit.
If a consumer has a large claim and the time and resources to pursue it, filing a claim with the DOR might be a feasible option. However, most consumers that are overcharged for sales taxes have small claims, and are unlikely to invest the time to pursue them. Class action lawsuits are more efficient for both the consumer and the DOR because they streamline the process. Rather than dealing with hundreds of smaller claims, both sides can address all of the claims at one time.
SB 518 died in the waning days of the 2005-2006 legislative session.
---
Regulatory Victories
WPL Rate Case (6680-UR-115)
CUB helps ratepayers save $15 million
Wisconsin Power & Light (WPL) applied to the PSC to increase gas and electric rates by $95.6 million. Later in the year, WPL revised its request and increased its electric utility rate request to $164.7 million.
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% (WPL asked for 11.5%). The PSC approved a profit rate of 10.8%, saving ratepayers $7 million. The PSC also supported CUB's recommendation to exclude an imputation of $119 million in the capital structure for new power plants built in Sheboygan Falls in 2005, saving ratepayers $8 million.
In early 2007, the PSC authorized WPL an electric rate increase of $36.2 million, and a $1.9 million decrease for natural gas. CUB's efforts helped save WPL ratepayers at least $15 million.
---
PSC Rejects Special Rates for ERCO Worldwide
CUB helps save ratepayers $23 million over 10 years
ERCO Worldwide owns a chemical manufacturing plant in Port Edwards and buys electricity from WPL. As a part of the WPL rate case for 2007 (see above) 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 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 PSC 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 PSC's decision to defend 100-year-old principles of utility regulation that protect ratepayers from discriminatory deal making between utilities and powerful companies.
---
WPS Rate Case (6690-UR-118)
CUB helps ratepayers save $10 million
Wisconsin Public Service Corp. (WPS) applied to the PSC to increase gas and electric rates by $155.5 million.
WPS proposed to forego a rate increase in 2008 if the PSC agreed to allow WPS to implement a two-year pilot "revenue stabilization mechanism" (RSM). CUB argued that the PSC should reject the use of this mechanism unless WPS implemented energy efficiency programs to encourage customers to save energy, which WPS was not willing to do. CUB also argued against the RSM because it could allow WPS to receive profits as high as 16.6%. The PSC agreed with CUB and denied WPS's request to use the new pricing mechanism. Had this mechanism been approved, WPS could have earned excess revenues of $68 million.
The PSC concluded the case and authorized a $56.7 million increase for WPS electric operations, a 6.6% increase, and an $18.9 million rate increase for natural gas, a 3.8% increase. CUB's efforts helped reduce WPS's rates by at least $10 million.
---
Court Victory
CUB vs. WPL
Court sides with CUB; upholds prohibition of "retroactive rate making"
CUB sided with the PSC in a suit brought against the Commission by Wisconsin Power & Light (WPL) regarding interpretation of the fuel rules. WPL took the PSC to court when the PSC denied the utility a rate increase based on increases in fuel costs associated with the shutdown of the Kewaunee Nuclear Power Plant. The PSC originally ruled that to have granted the increase would have violated the long-stranding prohibition against retroactive rate making. WPL sought to have the PSC decision overturned. CUB entered the case in support of the PSC position. The courts sided with CUB and the PSC and ruled against WPL.
---
2005
WPS Rate Case (6690-UR-117)
CUB helps save ratepayers $70 million
WPS applied to the PSC to increase electric and gas rates by $157 million. CUB fought WPS's request on several fronts including: cost of service and rate design, WPS mismanagement of the Kewaunee Nuclear Power Plant resulting in a 5 month shutdown, and the immediate return of the nuclear power plant decommissioning funds following the sale of the plant.
The PSC approved a rate increase of $87 million for WPS electric and gas services for 2006. The PSC agreed with CUB's argument that the $107 million Kewaunee decommissioning fund should be refunded to ratepayers over 2006 and 2007 rather than over the 5 year period requested by WPS.
---
WPL Rate Case (6680-UR-114)
CUB helps save ratepayers $44.7 million
WPL applied to the PSC to increase electric and gas rates by $63.2 million. CUB argued for a more reasonable rate allocation across customer classes (residential, commercial, industrial), rate designs to create incentives for energy efficiency, and the impact of rate increases on low income customers, and WPL's request to disconnect certain residential customers during the winter moratorium period. CUB also argued for the immediate return to customers of $83 million in Kewaunee nuclear plant decommissioning funds following the sale of the plant.
The PSC authorized an $18.5 million rate increase for electric and gas utility services, and decided to use $56 million in Kewaunee decommissioning funds over the next two years to reduce WPL's revenue requirements.
---
WEPCO Rate Case (05-UR-102)
CUB helps save ratepayers $20 million
WEPCO applied to the PSC to increase electric and gas rates by $308 million. CUB filed testimony arguing for a lower rate of return, lower fuel costs, and for residential ratepayer protection from excessive rate increases. CUB also argued for an independent review of WEPCO's renewable energy program.
The PSC approved CUB's position for an independent review of WEPCO's renewable energy program and authorized a $288 million increase.
---
NSP Rate Case (4220-UR-114)
CUB helps save ratepayers $6 million
NSP applied to the PSC to increase electric and gas rates by $51.2 million, their first request for a rate increase (beyond fuel cost increases) since 1998. CUB argued for reductions in NSP's return on equity, equity levels, and the residential customer portion in the increase.
In authorizing a $43 million increase, the PSC agreed with CUB and lowered the requested return on equity and ordered NSP to work with PSC staff to develop goals for NSP's load management programs.
--- --- ---
2004
WEPCO Rate Case (05-UR-101)
CUB saves ratespayers $15 million and an additional $1 million per year!
Wisconsin Electric Power Company (WEPCO) applied to the PSC to increase electric rates by $85 million for the ongoing construction costs of the two 545-megawatt gas plants at Port Washington, and unit 1 of the Oak Creek coal plant. Based on CUB's intervention, WEPCO reduced its request by $15 million. CUB also saved ratepayers approximately $1 million per year by arguing for a different cost allocation method. The PSC approved a $54 million electric rate increase.
---
WP&L Fuel Cost Case (6680-UR-113)
Ratepayers save $11 million!
Wisconsin Power and Light (WP&L) applied to the PSC to raise electric rates by $21 million to cover projected increases in natural gas costs and the cost of purchasing power due to power plant shutdowns. The PSC approved a $10 million increase.
---
WPS/WP&L Nuke Plant Sale (05-EI-136)
CUB initially stops sale -- is suing to overturn PSC flip flop
Wisconsin Public Service (WPS) and WP&L applied for permission to sell the Kewaunee Nuclear Power Plant to a subsidiary of Dominion Resources, an unregulated, out-of-state energy company. CUB argued that the sale would result in a lack of public oversite of a nuclear power plant located in Wisconsin, thereby greatly increasing risks to Wisconsin's environment and economy. The PSC originally agreed with CUB and disallowed the sale, only to reverse its decision in March 2005.
---
WP&L Winter Disconnect Proposal (6680-EI-111)
WPL shutoff denied!
WP&L requested authorization to implement a mid-winter disconnection program for customers who do not pay their energy bill. CUB argued that the existing procedures for dealing with late payments were sufficient and that mid-winter shut-offs would put lives at risk. The PSC agreed with CUB and denied WP&L's request.
---
