$500 Million More? Utilities Seek New Rate Hikes

  • May 18, 2023
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870 450 Tom Content

In Wisconsin, there’s winter and then there’s construction season. See any orange barrels lately?

In the utility world, there’s winter and then there’s rate case season. See any rate hikes proposed lately?

Well, we’ve been on the road, and we’ve seen plenty of orange barrels. And we’ve been digging into the new PSC filings, and we’re seeing plenty of red flags.

As of today, all five Wisconsin investor-owned utilities have rate cases in front of the Public Service Commission. Four of them are proposing increases in electricity rates to take effect in 2024.

How much for all of the utilities? More than $500 million!

The bottom line is that MGE is looking for a 7% increase for electricity customers, Xcel is seeking a 5% increase, and Alliant is seeking a 14% increase. Coupled with a separate fuel-related request detailed below, Alliant customers could see an increase of 18% on their bills in 2025. And We Energies customers face a 2.5% increase.

This comes after all five Wisconsin utilities raised prices in January. This chart shows the electricity bill increases that already hit, and what’s now been proposed for 2024.

And natural gas utilities are also seeking increases on local distribution rates. See the increases that just took effect, and what’s on tap for 2024:

Scroll down to find more about your utility. First, here’s some more context about the filings:

Why all the increases?

The factors vary from utility to utility, but construction projects for new generation (solar, natural gas, wind, energy storage) are driving higher costs. And those are hitting at a time when customers saw a huge run-up in natural gas and coal prices just last year. Natural gas prices have eased somewhat but it’s unclear where they’ll land.

There are policy matters in these cases, including initiatives to help struggling customers. We’ll have more on the policy debates in upcoming blog posts and on the CUB Tracks podcast. 

Are these utility companies hurting?

In a word, no! The parent companies for the five Wisconsin utilities reported billions in profit last year. And the profits for just the monopoly utilities that they operate in Wisconsin totaled $1.3 billion in 2022, including:

  • $758 million for WEC Energy Group’s We Energies and WPS utilities;
  • $315 million for Alliant’s Wisconsin utility;
  • $125 million for Xcel’s Wisconsin utility; and
  • $111 million for MGE.

Utility profits are a key issue for CUB. They are far too high and are well in excess of what these companies need to invest in their businesses. Under federal and state law, the PSC must balance consumer and investor interests when setting rates. Right now, Wisconsin utilities are in strong financial positions while consumers, who are the source of utility profits, are hurting.

What’s being done about excessive profits?

CUB advocated last year for much lower profits for the We Energies and WPS utilities in eastern Wisconsin, and if our positions had been adopted that would have saved customers more than $100 million! The PSC did bring down the profit for We Energies, Wisconsin Public Service and the We Energies Wisconsin Gas utility, and that produced savings of $40 million this year, and another $40 million next year.

So, the PSC brought profit rates down. Are the utilities sensing that trend, or are they asking for more?

In the new case, both Xcel and Alliant are asking for more related to their profits:

  • Xcel is looking to hike its profit rate to 10.25%, which would be far and away the highest in Wisconsin, and out of line with the national average.
  • Alliant is seeking to have more dollars flow in through its 10% profit rate, also above the national average. Alliant would do this by shifting more of its finances to raising money through stockholders rather than through the less costly option of additional financing via borrowing. Utility customers are being asked to pay for that more expensive capital.
  • MGE is seeking to retain its current profit rate, but that 9.8% rate is still well above the national average.

What happens next?

PSC auditors will review the filings and audit the requests and ask questions of the utility. CUB and other intervenors will also ask questions on key issues.

  • Summer: Completion of PSC staff audit
  • Summer: Testimony by CUB, PSC staff, other parties in the case.
  • Fall: Public Hearing / public comment period. Public comments can be filed electronically once the public comment window opens.
  • Decisions in each case by the PSC may be finalized before the end of the year.

How can I weigh in? When will public hearings be held?

We know you’ll want to weigh in on these cases. Customers of Wisconsin utilities will have a chance to weigh in with public comments and at public hearings, likely in the fall.

Here is the PSC public comments page for all active cases where comments are allowed.

We’ll keep you posted on how you can participate in the rate cases. Stay up to date by signing up for our e-newsletter here, and subscribe to our podcast on YouTube or your regular podcast channels.

Get the details. Find your utility’s request below:

Alliant Energy – Wisconsin Power & Light Co.

  • Size of total electric bill increase vs. today: 18%, including fuel surcharge
  • 2024: $110.9 million, 8.4%
  • 2025: $71 million, 5.4%
  • Total: $181.9 million, 14.3%

See the PSC documents in this case, docket 6680-UR-124

Alliant is also seeking a surcharge for fuel costs not collected from customers last year, when natural gas and coal prices surged leading the company to spend $123 million more on fuel for its power plants.

The fuel surcharge would increase customers’ electric bills an additional 4.1%, on average, starting in October, under the utility’s proposal.

The fuel case is in a different proceeding at the PSC. You can see those filings in docket 6680-FR-2022.

So, the all-in electricity bill increase facing all Alliant customers is $305 million, an 18.4% increase from where things stand today. And, owing to the fuel surcharge, the hike for residential customers’ bills is expected to be even higher – exceeding 20%.

Alliant is also seeking an increase in natural gas rates by $16.5 million, or 6.3%.

CUB will be diving into both Alliant cases. The PSC will be conducting an audit to look for savings for customers.

Madison Gas & Electric Co.

Size of electric increase vs. today: More than 9%

  • 2024: $18.5 million, 3.75%
  • 2025: $16.9 million, 3.41%
  • Total electric: $34.9 million, 7.29%

MGE is also seeking a natural gas rate hike:

  • 2024: $6 million, 2.56%
  • 2025: $4 million, 1.66%
  • Total gas: $10 million, 4.26%

See the PSC filing documents in this case, docket 3270-UR-125

As with Alliant, the increase would be higher for residential customers under the utility’s proposal. MGE is forecasting an increase of 4.8% for 2024 and 4.4% for 2025, a cumulative increase of more than 9.4%.

MGE is also seeking to recoup fuel costs it spent last year that it hasn’t collected from customers. The total fuel cost surcharge would mean another $8 million for MGE customers, another 1.8% increase. See more on that in this case: 3270-FR-2022.

Xcel Energy / Northern States Power-Wisconsin

Size of electric increase: 4.8% 

  • 2024 electric increase: $40 million, 4.8% for customers in 2024.
  • 2024 increase for residential customers: 7.8%.
  • 2024 natural gas increase: $9 million, 0r 5.3%.

See the PSC filings in this case here: 4220-UR-126

We Energies (Wisconsin Electric Power Co.)

Size of increase: 2.5%

  • 2024 electric increase: $86 million, or 2.5% for 2024, split evenly between costs for new projects as well as for higher costs tied to the Point Beach nuclear plant power purchase agreement.
  • 2024 natural gas increase:  4.5% for Wisconsin Electric Gas Operations customers
  • 2024 natural gas increase: 2.9% for Wisconsin Gas customers

See the PSC filings in this case here: 5-UR-110

Wisconsin Public Service Corp. (WPS)

No increase, if current fuel cost projections hold

  • Electric decrease: $28.5 million, 2.3%.

WPS is seeing $9 million in extra costs tied to new projects, but those costs are projected to be offset by lower $36 million in lower fuel costs, so the utility at this time is forecasting a decrease for 2024. If gas prices trend higher, an increase could still be in the offing for WPS customers.

See the PSC filings in this case here: 6690-UR-127