Smaller rate increases proposed for We Energies, WPS customers
Customers of We Energies and Wisconsin Public Service will face much smaller rate increases than the utilities initially sought under a proposed settlement now before state regulators.
The agreement between the utilities and ratepayer groups would trim We Energies’ rate increase to $100 million, down from $176 million initially sought by the utility, and cut WPS’ rate increase to $46 million, down from $94 million initially sought.
We Energies’ overall rates would increase by 1.3% instead of 5.8% and WPS’ rates would increase by 4.7% instead of 9.8% if the proposed settlement is approved by the Public Service Commission.
The rate increases would be the first for We Energies in four years and for WPS in five years.
How any overall rate increases would be allocated among residential, commercial, industrial and other customers would be determined by state regulators.
“We think there are clear wins for
customers here,” said Tom Content, executive director of the Citizens Utility Board of Wisconsin, which represents residential and small commercial customers before the PSC.
WEC Energy Group, the parent of We Energies and WPS, negotiated the settlement with CUB and Wisconsin Industrial Energy Group, which represents large business customers.
The agreement, which includes Wisconsin Gas, was filed with the PSC late Friday and disclosed to WEC stockholders on Monday.
It addresses several of the key issues in the rate case filed by the utilities in March and now before the PSC.
“Overall, we really think this should be well received by the PSC,” said Todd Stuart, executive director of the Wisconsin Industrial Energy Group. “We think it is a pretty balanced approach.”
We Energies said the same.
“This settlement is a positive step forward — a balanced approach to resolving the major issues in the various rate cases,” said Brendan Conway, a spokesman for WEC.
We Energies previously agreed to drop a proposed surcharge on residential and commercial solar customers in a settlement reached with Renew Wisconsin.
The terms of the proposed settlement with CUB and Wisconsin Industrial Energy Group include:
❚ We Energies and WPS will not increase their fixed charges for residential and small commercial electric and natural gas customers through 2021.
❚ The utilities would be allowed to earn a 10% return on their stockholders’ investment and Wisconsin Gas would be allowed to earn a 10.2% return. We Energies, which now is allowed to earn a 10.2% return, had asked to be allowed to earn 10.35% on its stockholders’ investment.
❚ Profit above the allowed rate of return would be shared with customers under a set formula. The utilities would retain 100% of the first 0.25% of profit and 50% of the profit of the next 0.50% above the allowed rate of return. Any additional profit would go toward lowering customers’ bills. Under the profit-sharing formula now in place, We Energies customers have received $75 million and WPS customers $21 million over the past three years.
❚ We Energies would use a financial transaction, known as securitization, to remove $100 million of the $397 million remaining on the utility’s books for the Pleasant Prairie power plant closed in April 2018. This would reduce the future profit that its stockholders earn from their investment in the plant — the portion yet to be recovered from customers — by roughly $100 million over the next 20 years.