MGE Cases
Madison Gas & Electric
Rate Case for 2010
Docket 3270-UR-116
On April 29, 2009, MGE 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.
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. Improved rate designs are especially important given increasing utility costs as well as future cost drivers such as peak growth and global warming.
The Commission issued its order on Dec. 14, 2007, in which it instructed MGE to continue working with CUB to develop alternative rate designs. Regarding 2008 rates, the Commission approved electric rate increases of $16.2 million, or 4.8 percent; and natural gas rate increases of $7.8 million, or 2.8 percent.
In a follow-up to this rate case, CUB consultants worked with MGE on alternative rate designs, which would encourage customers to use less electricity.
Madison Gas & Electric
Fixed Financial Parameters for the Top of Iowa Wind Project
Docket 3270-CE-126
On January 19, 2007, MGE applied to the Commission for an order approving of the use of "fixed financial parameters" at the proposed Top of Iowa Wind farm. This was the second instance of a utility asking to use this mechanism of financing for the construction of a generation unit (the first was Wisconsin Power & Light).
"Fixed-financial parameters," is an assault on traditional regulation. In 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 intervened in the MGE proceeding to review the potentially negative impacts to ratepayers of using fixed financial parameters at the Top of Iowa project, since once in place, the parameters could not be changed for the life of the generation project. On May 4, 2007, in recognition of the Commission's decision regarding fixed financial parameters for WPL's Cedar Ridge Wind project, MGE withdrew its application to use fixed financing.
Madison Gas & Electric
Rate Case for 2006 Rates (Reopened)
Docket 3270-UR-114
In late June, 2006, MGE requested permission to "reopen" its rate case for 2006 rates, so that it could update forecasts for the cost of natural gas, and for other items. New prices would go into effect on January 1, 2007.
The PSC issued its decision on Dec. 26. MGE allocated the increase associated with costs for its share of the Oak Creek Power Plants using non-coincident class demands. CUB argued that the use of a mix of demand and energy allocators for production-related costs is appropriate for spreading the Oak Creek costs to the customer classes. The Commission agreed and found that using a 60/40 mix of coincident demand and energy allocators is the most reasonable way to allocate production related costs like the Oak Creek costs.
