Current Cases

Madison Gas & Electric
Rate Case for 2008 & 2009 Rates
Docket 3270-UR-115

On May 7, 2007, MGE applied to the Commission for an electric rate increase of $19.6 million, or 5.75%, and a natural gas rate increase of $9.1 million, or 3.73%.  The proposed rate increase totaling approximately $29 million would go into effect in 2008. 

CUB sought the development of alternative rate options that would allow a customer to better control their electric energy costs while also reducing the cost drivers for the utility.  CUB's review of MGE's proposal showed that there are important improvements that should be made to voluntary residential time-of-use-rates that would better reflect the connection between rates and the cost of customer consumption.  CUB's investigation also showed that MGE's current standard flat rate for residential customers is discriminatory and fails to provide the proper price signals to customers concerning the cost of their energy use at different times of the day.  CUB recommended that MGE prioritize the development of rates that provide the proper price signal to customers.

Improved rate designs are especially important given increasing utility costs as well as future cost drivers such as peak growth and global warming.   Under MGE's proposal the rate classes with small customers, including residential customers, would end up paying approximately $11 million more per year than justified.  CUB proposed an alternative to MGE's proposed cost allocation that would significantly limit the costs passed on to residential customers.  Under CUB's proposal, residential and small customers' rates would increase by $4 million, a $7 million reduction from MGE's proposal.

Direct Testimony of George Edgar and Wayne DeForest
Rebuttal Testimony of George Edgar and Wayne DeForest
Surrebuttal Testimony of George Edgar and Wayne DeForest
CUB's Initial Brief
CUB's Reply Brief
CUB's Comments on Staff's Briefing Memorandum and Decision Matrix

On December 14, 2007, the PSC issued its order approving an electric rate increase of $16.2 million (4.8%) and a natural gas increase of $7.8 million (2.8%).

WEPCO
Rate Case for 2008 & 2009 Rates
Docket 05-UR-103

On May 7, 2007, WEPCO applied to the PSC to raise its electric rates by $712 million or 28 percent in 2008, the largest single-year increase in the utility's history.  The utility also requested to raise its natural gas rates by $12 million for Wisconsin Electric's gas operations, and $36 million for Wisconsin Gas natural gas operations. 

In its request, WEPCO asked for authority to collect higher rates to cover costs from increases in the price for fossil fuels used to produce electricity, for higher costs to transmit power on high-voltage transmission lines, and to pay for higher costs caused by the regional electricity marketplace operated by the Midwest Independent Transmission System Operator (MISO).  CUB challenged many aspects of WEPCO's request to increase rates, and urged the PSC to require WEPCO to offer innovative rate designs so that its customers can use electricity more efficiently.

Fuel Costs

The proposed increase in total fuel costs, excluding the Point Beach power purchase agreement with FPLE, is $46 million.  CUB investigated the reasons why WEPCO proposed to increase fuel costs rather than decrease fuel costs in 2008.  Reasons why fuel costs should be decreasing include the fact that the Company has brought on line a large, new efficient generation unit, the Port Washington gas plant, that will displace less efficient generation, and that natural gas prices have decreased by 31% from the last time WEPCO's fuel costs were established.

Are the Results of PROMOD Reasonable?

For the first time in a rate case WEPCO projected power costs through use of a PROMOD model to estimate its fuel costs and both prices and quantities of hourly net purchases from MISO.  The accuracy of WEPCO's PROMOD projections is critical since fuel costs are such a large component of the overall costs of operating a utility.  CUB investigated whether WEPCO's modeling exercise was unbiased and accurate by taking an in depth look at how the Company tested the model, and how the results of the model during the recent past compared to actual fuel costs WEPCO has incurred.


Rate Designs to Assist Residential Customers to Lower Their Utility Bills

Given the magnitude of the rate increase proposed by WEPCO it is especially important to develop alternative rate options that allow residential customers to better control their electric energy costs while also reducing the cost drivers for the utility.  CUB proposed residential rate designs ranging from inverted rates with a critical peak pricing element to improved time-of-use rate designs, as well as improved load management opportunities for small customers. 

Collection for Deferred Costs

WEPCO proposed to begin collection of a large assortment of previously deferred expenses.  The rate increase request includes $120 million to pay for these expenses.  CUB investigated whether any or some of the deferred expenses should be collected in current rates.  CUB reviewed whether deferred costs were prudently incurred.  For example, WEPCO requested $22 million in rates for deferred replacement power costs incurred during the 2005 spring outage of the Point Beach nuclear plant.  CUB argued that the replacement power costs were not prudently incurred because the outage was extended by an additional 50 days while the Company waited to receive regulatory approval to replace a major component of the plant.  CUB provided evidence showing that the Company failed to comply with regulatory requirements in a timely manner and violated federal regulations, forcing the plant to remain shutdown for nearly two extra months.

Sale of the Point Beach Nuclear Plant

Now that the sale of the Point Beach plant has been completed, WEPCO reduced the electric rate increase. WEPCO requested that rates increase by 7% in 2008 and 7% in 2009.  WEPCO has proposed a complex treatment of the net proceeds of the sale of Point Beach.   CUB investigated WEPCO's proposal to withhold $70 million of the revenue from the sale for what it called contingency provisions.  CUB submitted evidence that this $70 million should be immediately returned to ratepayers rather than be kept by shareholders.

CUB filed the testimony of our expert witnesses in October 2007, and our legal briefs in November 2007.

CUB's Expedited Motion to Compel
Direct Testimony of Lee Smith
Direct Testimony of George Edgar and Wayne DeForest
Rebuttal Testimony of George Edgar and Wayne DeForest
Surrebuttal Testimony of George Edgar and Wayne DeForest
Surrebuttal Testimony of Lee Smith
CUB's Initial Brief
CUB's Reply Brief

On January 17, 2008, the PSC issued its written order approving an increase of 3.4% in electric rates and a 2.2% increase in gas rates.  The PSC accepted CUB's contention that WE Energies was responsible for causing an extended outage at Point Beach in 2005 and denied the Company's request to increase rates by $22 million to cover costs caused by the outage.  The PSC also agreed with CUB that WEPCO cannot keep $70 million in proceeds from the sale of Point Beach for contingencies.

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.

WEPCO
Addition of Pollution Controls to the Oak Creek Power Plant
Docket 6630-CE-299

On June 21, 2007, WEPCO applied for approval from the PSC to install pollution control devices on the Oak Creek Power Plant.  WEPCO is proposing to install the pollution control equipment to meet the requirements of an EPA Consent Decree and new sulfur dioxide and nitrogen oxide air emission requirements.  The utility estimates that the pollution control devices will cost $830 million, which is about the same cost as a new power plant.

CUB and the environmental group Clean Wisconsin are intervening in this case together to explore whether WEPCO looked at reasonable alternatives to installing pollution control equipment on an old coal power plant.  These alternatives include retiring the Oak Creek Power Plant and, instead, making investments in energy efficiency and renewable energy.

CUB and Clean Wisconsin will also examine the assumptions used by WEPCO to estimate the costs of the pollution control equipment, and whether the equipment will allow the utility to comply with air pollution regulations.

Economic Impact Issues

• Has WEPCO properly modeled the capital costs and future O&M costs of the Oak Creek units with and without the installation of the Environmental Facilities in its economic justification of the proposed investment?
• Did WEPCO include appropriate costs for future environmental compliance at the Oak Creek units and other WEPCO units in its economic evaluations?
• Has WEPCO accurately determined the impact of the proposed Environmental Facilities on the operation of the WEPCO plants in the MISO energy markets?
• What is WEPCO's outlook for the supply and demand balance for electric capacity annually over the planning horizon?  Are the Oak Creek units needed to meet the needs of electric consumers in Wisconsin?
• Is WEPCO planning future capacity additions that could affect the value to the Oak Creek units to WEPCO's customers?  Has this new capacity been properly modeled?  What other capacity assumptions have been made by WEPCO over the planning horizon?
• Did WEPCO appropriately consider alternatives to investing in the Environmental Facilities, including, but not limited to, the retirement of these units and replacement with newer, more efficient capacity or investments in energy efficiency?
• Has WEPCO appropriately considered the implied costs and value of future emissions in its economic evaluations?

Environmental Impact Issues

• Has the Company chosen the best solution(s) for compliance with the provisions of the Consent Decree that relate to Oak Creek Power Plant?
• Will the installation of the proposed Environmental Facilities comply with the current environmental regulations and the Consent Decree?
• Are the capital and future operating costs of the proposed Environmental Facilities reasonable?
• What additional measures beyond the proposed Environmental Facilities will be required at Oak Creek Power Plant to comply with future environmental regulations?
• What is the expected timing and costs of these future measures?

Direct Testimony of Richard Hahn (Redacted from Confidential)
Direct Testimony of Phyllis Fox
Surrebuttal Testimony of Richard Hahn (Redacted)
Surrebuttal Testimony of Phyllis Fox (Redacted)

The PSC will likely make a decision on this case in the first half of 2008.

Public Service Commission
Utility Recovery of Deferred MISO Day 2 Costs
Docket 05-EI-139

In the summer of 2006, the PSC opened this docket to determine whether and how utilities should be able to recover costs that they have accumulated due to the regional electricity market administered by the Midwest Independent Transmission System Operator (MISO).  CUB intervened to make sure that the utilities don't try to rig the methodology in a way that would raise rates to recover costs already included in rates. On August 30, 2007, the Commission ordered that to recover deferred MISO day 2 costs a utility must demonstrate in its next full rate case an overall increase in costs as a result of MISO Day 2.  The Commission also ordered that utilities may not defer MISO costs unless they also defer MISO revenues to prevent the possibility of a utility over-collecting its costs.

Direct Testimony of Lee Smith
Rebuttal Testimony of Lee Smith
Surrebuttal Testimony of Lee Smith
CUB's Initial Brief
CUB's Reply Brief
CUB's Comments on the Staff Briefing Memorandum

American Transmission Company
Arrowhead Transmission Line
PSC Docket 05-CE-113

In 2006 CUB requested the Commission to investigate whether the Arrowhead transmission line, as designed, would cause reliability problems, including the possibility of blackouts.  The Commission has yet to respond to CUB's request for an investigation.