©2015 E&E Publishing, LLC
Republished with permission
By Jeffrey Tomich
It’s little secret that Green Bay Packers football is a rite of fall in Wisconsin. And if the last two years are an indication, there is perhaps a lesser-celebrated tradition — a bitter fight over how electric utility rates are structured.
After winning regulatory approval to nearly double fixed charges to $19 a month for residential customers last year, the Wisconsin Public Service Corp. is seeking to again raise monthly fixed charges on customers, this time by almost a third to $25, or $300 a year.
Wisconsin regulators decided three controversial decisions regarding fixed charges last fall in favor of utilities. Now, with an evidentiary hearing concluded this month, the Public Service Commission is approaching a decision in the latest case, one in which the issue of fixed charges and the future of the solar industry are again heating up.
Unlike Arizona or Hawaii, known for year-round sunshine, Wisconsin Public Service’s northeast Wisconsin service area, which includes Green Bay, is an unlikely battleground over the future of rooftop solar. But, with utility cases having drawn national attention, it has become just that.
The Alliance for Solar Choice, a national advocacy group whose members include SolarCity Corp. and Sunrun Inc., has been deeply involved in the rate cases. The politically charged issue has drawn the interest of a Florida tea party activist and accusations of bias against the now-chairman of the commission.
In the current Wisconsin Public Service case, the utility is asking regulators to increase the monthly residential fixed charge to $25 after implementing an 82 percent increase less than a year ago, from $10.40 to $19. The utility would reduce the variable kilowatt-hour charge.
The new rate design is justified, the utility says, because long-standing tariffs rely too heavily on variable energy charges to recover fixed costs like meters, poles, wires and substations.
A continued emphasis of energy efficiency from state and federal policies, slow customer growth in its service area and increased penetration of rooftop solar are causing energy sales to flatline and eroding its ability to recover those fixed costs, Wisconsin Public Service says. And solar penetration will only continue to accelerate as costs decline.
“It’s really an effort to align the fixed costs with the fixed charge,” utility spokesman Kerry Spees said.
Wisconsin Public Service acknowledges that solar penetration in its service area is low, but the utility said the change it’s seeking is an effort to get ahead of the distributed generation boom.
“You can see where it’s headed,” Spees said.
Environmental, solar and consumer advocates say increasing fixed charges is simply bad policy. They argue it punishes low-income consumers who use less energy and serves as a disincentive for customers to save energy and invest in distributed generation.
What’s more, they say the utility’s argument that it’s being hurt by customers who self-generate with solar panels is a red herring.
Rob Kelter, senior attorney for the Environmental Policy & Law Center, a Chicago-based environmental advocacy group, points to testimony in the case showing fewer than 50 of 450,000 Wisconsin Public Service customers a year added solar panels in 2013 and 2014. And barely more than that have added solar arrays or applied to do so this year.
By the utility’s estimate in its testimony, only about a third of those solar-owning customers failed to cover their fixed costs in 2013. Even then the utility failed to provide data to prove that was the case, Kelter said.
“By their own count, 65 percent of their solar customers are covering their costs,” he said. And because there’s so little solar deployed, any subsidization that’s occurring — and the utility has yet to prove it is — is a rounding error, according to the group.
Wait and see
Many of the arguments advanced by all parties in the case are similar to ones argued a year ago in cases involving three Wisconsin utilities, including Wisconsin Public Service. The two sides presented significantly different data related to what the utility’s fixed costs are and how higher charges would affect low-use consumers.
The commission ruled 2-1 in favor of all three of the utilities a year ago. While they didn’t get the full increases they sought, commissioners suggested additional fixed-charge increases were warranted (EnergyWire, Nov. 17, 2014).
Since the decisions in late 2014, the lone Democratic appointee on the three-member panel, Eric Callisto, saw his term expire. Gov. Scott Walker (R) appointed a former Republican state legislator, Mike Huebsch=, as Callisto’s replacement.
EPLC and other groups opposing another fixed-charge increase for Wisconsin Public Service say the commission should wait to see the effect of the increase implemented on Jan. 1 before authorizing an additional increase.
The PSC staff agreed in testimony, noting that the recently implemented fixed-charge increases “have yet to be evaluated to determine whether they are achieving the stated policy goals” before proceeding with additional changes.
While the current case involves almost the very same parties and arguments as the one last year, there is a new voice advocating for higher utility fixed charges — a group called Fair Rates for Wisconsin’s Dairyland.
The group, which formed just before the Wisconsin Public Service case was filed, is led by a former Wisconsin PSC commissioner and state legislator, Mark Meyer. The group, whose supporters include utilities and several labor unions, says its mission is to “champion equitable funding and lead the discussion about the thoughtful integration of distributed generation.”
Kelter said the commission should disregard the group’s testimony because case records show it not only received funding from Wisconsin Public Service but provided testimony to a utility executive to review before it was filed.
“We think that the commission shouldn’t give [its testimony] any weight given that they ran it by the company,” he said.
A representative for the group couldn’t be reached for comment yesterday afternoon.
Spees said he didn’t have information regarding what effect the higher fixed charges have had on energy efficiency or solar deployment in the utility’s service area since Jan. 1.
Nor would he speculate on whether Wisconsin Public Service would seek additional fixed charges if the company is successful in the current case. In testimony, the utility estimates that fixed costs are $66 a month for residential customers.
“I don’t think those decisions have been made,” he said. “It’s something our folks will be constantly looking at.”
Meanwhile, Xcel Energy Inc. is asking the commission to more than double fixed charges for residential customers in Wisconsin to $18 a month from $8.
And critics fear other utilities will be knocking at the commission’s doors if Wisconsin Public Service is successful.