April 16, 2014: CUB Sues PSC – Rate Discrimination Alleged

For Immediate Release: April 16, 2014

CUB Sues PSC – Rate Discrimination Alleged

MADISON — Today, the Citizens Utility Board (CUB) filed a lawsuit challenging a Public Service Commission of Wisconsin (Commission) decision that would force We Energies’ electric ratepayers to pay more than $250 million to subsidize big business steam customers in downtown Milwaukee.  The lawsuit stems from a Commission decision to approve We Energies’ request to convert the Valley Power Plant (Valley) from coal-fired to gas-fired at a cost of approximately $80 million and how costs for the conversion would be allocated to different customers.
Despite the fact that the Valley plant’s primary purpose is to provide steam for heating and industrial purposes to nearly 450 customers in downtown Milwaukee, the Commission determined that We Energies’ electric customers should pay 92 percent of the project’s capital costs, or $74 million, while only eight percent of the project’s costs, or $6.4 million, would be paid by steam customers.
In addition, the Commission determined that We Energies’ electric customers should pay 100 percent of Valley’s uneconomic electric dispatch costs estimated to be $185 million over the life of the plant, despite the fact that those costs are caused solely by the need to provide service to steam customers.
“More than $250 million of electric ratepayer money is on the line, and CUB is going to court to protect it,” said Kira Loehr, CUB’s general counsel and acting executive director.  “If left standing, the Commission’s decision would force We Energies’ electric customers to pay hundreds of millions of dollars in utility costs caused by steam customers.  Wisconsin law prohibits such unjust discrimination.”
CUB’s lawsuit argues that the Commission’s decision is unjust, unreasonable, and unduly discriminatory because it requires electric customers to pay nearly all of the costs for a utility plant whose primary purpose is to generate steam used for heating and industrial purposes by Milwaukee businesses.  Thus, the Commission’s decision causes electric customers to unfairly subsidize steam customers.  The Commission’s decision violates Wisconsin law which prohibits rates that are “unjust, unreasonable, insufficient or unjustly discriminatory or preferential or otherwise unreasonable or unlawful.”
CUB’s lawsuit requests that the court issue an order declaring that the Commission’s decision was arbitrary, capricious, an abuse of discretion, a departure from established practice and policy with insufficient explanation, and unsupported by the administrative record.   CUB also requests that the court issue an order vacating the Commission’s decision allocating 92 percent of the Valley Power Plant conversion costs and 100 percent of the plant’s uneconomic dispatch costs to We Energies’ electric customers.

###