Expert Blog

Wisconsinites and a Green Bay Packer Have Spoken: Don't Block Renewables and Efficiency with Increased Rates

Samantha Williams (Alum)

It’s been quite the week for Wisconsin’s energy consumers.  One thing is certain: the state’s utilities seem to have underestimated just how much their customers are paying attention. 

Citizens came out in droves this week to protest a series of new proposals from Wisconsin’s three major investor-owned utilities to restructure their rates - We Energies, Madison Gas & Electric (MG&E) and Wisconsin Public Service Corporation.

While in the short-term these proposals would allow utilities to recover their costs of serving customers, the impacts on every-day energy use and clean energy in Wisconsin could be devastating. Community-members are also worried that this is a coordinated assault on energy efficiency and renewables (and specifically on rooftop solar generation).

With these rate change requests, Wisconsin has become a kind of “proving ground” for a tug of war that will be occuring nationally between entrenched utility ratemaking and a rapidly changing energy market.  As Slate recently made clear in an article entitled, We’re Watching You, Wisconsin Public Service, whatever the final outcome, these cases “will have a huge effect on America’s energy future.”

On Wednesday more than 200 people packed a hearing room in Milwaukee on We Energies’ request to increase the “fixed cost” portion that appears every month on customers’ bills, (typically covering meters, service lines, meter reading, and billing). The utility, which serves 1.1 million customers, is also requesting an additional charge specifically on distributed generation. The very next day, it was standing room only at the Public Service Commission in Madison, where a second room was added to accomodate high demand for public comment on a proposal from the 140,000-customer MG&E, including a near-doubling of monthly fixed costs and a first-ever “grid connection” fee for all homeowners and small businesses. For MG&E, these in-person comments were an added layer atop nearly 1,200 written public comments filed against the proposal. 

And what makes this outcry all the more provocative is the diversity of voices calling for the utilities to put their requests on hold and go back to the drawing board. In the MG&E case, joining the ranks of homeowners and clean energy advocates were:

Groups of this ilk were also joined in the We Energies case by Mark Tauscher, former Green Bay Packers offensive lineman, and even the leader of Georgia's Tea Party.  This is in addition to the environmental groups (like NRDC, Environmental Law and Policy Center, Wind on the Wires, RENEW Wisconsin, and Clean Wisconsin) and municipalities (the Cities of Madison, Minona, and Middleton, and Dane County) who have formally intervened.

Now compare this to previous rate cases where the utilities requested changes in what they could charge customers: MG&E, for example, received a total of 75 public comments over its last three cases. This week's current level of engagement is far above the norm.

So, why all the attention? 

Increases in fixed charges are like kryptonite for customers looking to invest in energy efficiency. When a utility increases its fixed costs, it simultaneously decreases the variable charge that goes up and down as customers change how much energy they use.  This variable charge is the only portion of the bill that customers have the ability to control through smarter energy use.  When the variable charge is low, it sends an “all you can eat” price signal, reducing the rewards for conserving.  Implicitly, the utility is telling consumers: We’ll reward you for using more energy, and penalize you for using less. 

The same goes for consumer incentives for buying or leasing rooftop solar panels. These fixed charge hikes increase payback periods and present a very real barrier to getting more distributed generation off the ground in Wisconsin and onto the roofs.  

Consumers are on high alert. 

At MG&E’s hearing Thursday, the public comments were extraordinarily well-informed and insightful. Several commenters hold shares in the utility, and despite their potential to profit from the rate proposal, they nonetheless decried it as a move away from clean energy. They also registered their concerns that it is “fundamentally wrong” to decrease incentives to save energy. 

There appeared to be an understanding amongst the commenters that Wisconsin’s utilities should be able to recover their costs, but that other ratemaking methods must also be considered that could be more palatable to consumers and utilities alike. At the MG&E hearing, one community member proposed an alternative like decoupling, a rate structure that allows the utility to recover its costs of service without the detriment to efficiency and renewables that come along with a heightened fixed charge.

And while MG&E has responded in part to this outcry, having scaled back parts of its proposal in the last few months and just last week advising customers that it intends to begin a “comprehensive customer and community engagement focused on the Madison-area’s energy future,” these moves are not enough. The utility still plans to pursue its proposal to nearly double its fixed costs for 2015, and has presented little information supporting its present urgency.

Not to mention the fact that Wisconsin is now on a very public stage for this debate. The national attention documented by the Slate article only adds to the chorus of customers already demanding that Wisconsin’s investor-owned utilities rethink their proposals.  And the formal intervenors on these dockets, including NRDC, couldn’t agree more.  Wisconsin’s utilities still have the chance to reverse course and transform these cases into an opportunity to develop a nation-leading plan that could reduce harmful carbon pollution, while fostering clean energy and a thriving economy at the same time. 

We urge them to seize this opportunity.