Protecting the bottom line with rate case interventions
WIEG’s efforts on behalf of large energy users has led to significant results. In the last ten years, investor-owned utility rate hike requests have been reduced by roughly 69% for a total of over $1.3 billion. In addition, WIEG has successfully advocated for new market-based industrial tariffs. In just a few years, these efforts have resulted in savings of more than $120 million versus standard industrial tariffs.
WPL 2022-2023 rate case (6680-UR-123)
The PSC approved WPL’s rate case settlement agreement with WIEG, CUB and other consumer advocacy and environmental groups for rate test years 2022 and 2023. There are three main drivers of the rate case: 1) WPL’s plan of acquiring 1,089 MW of solar would add over $1.5 billion to WPL’s rate base; 2) the federal tax cuts & jobs act benefits have been fully refunded and no longer offsets rate pressure; and 3) the recent significant increase in fuel costs. The agreement aligns cost increases with savings, including from the retiring Edgewater Unit 5 coal facility, and operation and maintenance cost management. The parties have identified a creative means of addressing the recovery of Edgewater Unit 5’s remaining book value after its planned retirement in 2022. The proposed levelized recovery is like a traditional home mortgage: by spreading costs over a longer period of time, it then lowers the monthly payments (-$18 million for the two years covered in this rate case and avoids over $60 million over the next ten years). Finally, there were several rate design changes as part of the agreement that are favorable to industrial customers. The PSC approved a significant increase in the interruptible credit as part of a package of energy efficiency and demand response initiatives.
MGE 2022-2023 rate case (3270-UR-124)
The PSC approved MGE’s rate case settlement with WIEG and other intervenors for 2022-2023. Increased fuel costs, construction costs associated with the Badger Hollow Solar Farm and the expiration of the 2017 Tax Cuts and Jobs Act are the drivers of the rate increase. MGE will address potential 2023 rate changes through an electric limited rate case re-opener and a step increase in natural gas rates. The limited reopener for test year 2023 is a placeholder, and it would include generation changes (several solar, wind and battery applications are pending PSC approval) plus any impact from potential federal corporate tax changes.
NSPW 2022-2023 Rate Case (4220-UR-125)
The PSC approved NSPW’s rate case settlement with WIEG and other intervenors for 2022-2023. The settlement agreement increases electric base rates by $35 million (4.9%) for 2022 and an incremental $18 million (2.5%) for 2023. The PSC considered NSPW’s 2022 fuel cost plan as part of the same proceeding. Increased fuel costs are driven by higher natural gas prices coupled with increases in projected MISO congestion costs. The fuel cost proceeding results in increases in electric rates of $24 million (average of 5.2%) for 2022 with a $0.00373/kWh ECAC surcharge. There are several rate design changes that support WIEG’s long-held demand response and energy efficiency goals.
WEPCO 2022 Fuel Cost Plan application (6630-ER-105)
The PSC approved WEPCO’s 2022 Fuel Cost Plan application. WEPCO’s 2022 fuel costs were authorized at $39.14/MWh. WEPCO’s original filing was an increase of $29.4 million in total fuel costs compared to the approved 2021 Fuel Cost Plan (6630-ER-104). One of the biggest drivers, outside of the surging natural gas and coal costs, is the annual price escalation in the Point Beach Power Purchase Agreement (PPA).
WPSC 2022 Fuel Cost Plan application (6690-ER-105)
The PSC recently approved WPSC’s 2022 Fuel Cost Plan application. WPSC’s 2022 fuel costs were authorized at $28.97/MWh. WPSC’s original filing was a decrease of $6.3 million in total fuel costs compared to the approved 2021 Fuel Cost Plan. The primary driver for WPSC’s increase in monitored fuel costs is the rising cost of natural gas.
Other regulatory initiatives include:
WIEG successfully sought an incremental load Real Time Market Pricing (RTMP) tariff for We Energies’ customers. Following this win, WIEG successfully worked for the adoption of a similar tariff (New Load Market Pricing, or NLMP) for both WPSC and WPL customers.
WIEG also worked with WPSC and WPL to develop nominated load real time tariffs. WIEG negotiated changes to a WPSC tariff that is also called RTMP. Under the revised RTMP tariff, customers pay a $5.50 per MWh adder, but then pay day-ahead market prices.
A similar nominated load real time program was approved for WPL’s largest customers in the summer of 2017. The Day Ahead Market Pricing rider (DAMP) is now in place for qualified customers.
Together, these new tariffs help promote economic growth and development in Wisconsin, without shifting costs to any of the utility’s other customer groups. In just a few years, these efforts have resulted in savings of more than $120 million versus standard industrial tariffs.
Click below to view recent developments regarding these innovative tariffs:
http://psc.wi.gov/apps35/ERF_view/viewdoc.aspx?docid=183769
http://www.wisconsinpublicservice.com/company/wi_tariffs/rtmp.pdf
http://apps.psc.wi.gov/vs2015/ERF_view/viewdoc.aspx?docid=327314
The PSC granted the request of WEPCO regarding a financing order to authorize environmental trust financing (6630-ET-101). The utility estimates the issuance of environmental trust bonds to securitize $100 million of the remaining investment in environmental controls at Pleasant Prairie will deliver $40 million in customer savings over time. Securitization is in some ways similar to refinancing a mortgage. It’s a process by which a utility replaces relatively high-cost debt and equity, which is charged to electricity customers, with lower-cost debt in the form of securitization bonds. This gives the utility a more favorable bond issue and saves ratepayers money. Securitization of undepreciated costs of Pleasant Prairie was a key part of the 2019 rate case settlement involving WEPCO and negotiated by consumer groups CUB and WIEG (05-UR-109).
https://madison.com/wsj/658e94dd-143a-5496-82d1-44a7fd2fb141.html
http://www.thewheelerreport.com/wheeler_docs/files/110620cub.pdf
Recent legislative initiatives include:
Industrial RRCs & waste heat recovery/waste heat to power
Industrial customers can create and keep renewable resource credits (RRCs) in Wisconsin, including from waste heat recovery projects. WIEG was instrumental in passing two new laws to help keep energy-intensive operations competitive in Wisconsin (2013 Act 300 and 2017 Act 53). Applications are now available on the PSC’s website.