Alliant Rate Hike Approved, PSC Demands Savings When Coal Plants Retire

  • November 10, 2023
870 450 Tom Content

MADISON – Wisconsin utility regulators on Thursday approved a sizable increase in electric rates for customers of Alliant Energy but sent a strong message that they want to see more savings in the years ahead on coal plants that are being shut down as part of the energy transition.

CUB’s regulatory team put a spotlight on affordability, energy burden, and fairness in this case. Throughout the proceeding, CUB cited concerns about how much customers can continue to afford rising rates, given the aggressive building program Alliant and other utilities are undertaking as part of the energy transition.

The state Public Service Commission approved an increase for Alliant that will lead to a significant increase in 2024 and 2025, though the increase isn’t as large as Alliant sought. The overall increase for electric customers was $110.8 million, or 8.4%, compared with the utility’s requested increase of $181.8 million, or 13.8%. More information about the impact on residential and small business customers will be available next month.

“CUB made strong arguments to rein in utility profits and to shave off significant costs linked to the coal plants it’s shutting down in the next few years,” said Tom Content, CUB executive director. “The PSC’s decision on profits is expected to save customers about $40 million over the next two years, but the commission should have gone further to bring down the size of this rate hike.”

Spotlight on profits: The PSC moved in the right direction on utility profits by reducing Alliant’s profit rate, or return on equity, from 10.0% to 9.8%. The PSC also moderated Alliant’s profits by rejecting the utility’s move to increase the amount of revenue that is subject to the profit rate.

Taken together, the decision on Alliant’s profits will save customers roughly $20 million over each of the next two years. If the PSC had supported CUB’s full proposal on profits, Alliant customers would have seen more than $100 million in savings over 2024-25.

Costs for dead coal plants: On the Edgewater coal plant, which is planned to shut down in June 2025, CUB contended that utility shareholders needn’t profit for years and years going forward, long after the Sheboygan power plant shuts down.
The PSC didn’t deliver immediate savings on this issue, but commissioners were frustrated and disappointed that Alliant didn’t develop alternatives to produce more savings for customers and directed the utility to go back to the drawing board.

“CUB is glad to hear the commission indicate that utilities need to be thinking about customers’ ability to shoulder all the increases tied to building new power plants, and as such should be proactive in ensuring more savings when they shut down coal plants before the end of their useful lives,” Content said.

“In addition, state lawmakers should be looking at options to deliver more savings.”

On other significant decisions on Thursday in the Alliant cases, the PSC indicated support for:

  • Divvying up costs as the grid modernizes. In a significant win, the Commission agreed with CUB that a fresh look at how the grid operates hour to hour and over the year should be reflected in how cost increases are divvied up among small customers and big businesses. The grid is changing as more renewables are being installed, and CUB identified a need to bring how costs are allocated up to date to ensure that large energy users are paying their fair share,
  • Fairness and balance in pricing for customers with and without solar panels. The PSC wants to take a closer look at rates paid to residential customers generating their own electricity from solar panels. Alliant had sought permission to enact a change, dubbed the Renewable Power Partnership, starting next year. CUB thought Alliant’s proposal was a fair outcome balancing the interests of customers who have solar panels and those who do not, but CUB is also supportive of taking more time to have a broader statewide analysis, which the PSC opted for in this case.
  • Shareholders, not customers, paying for bonuses. The PSC sided with CUB in denying incentive compensation for utility executives and other employees. CUB argued that the incentive pay was too connected to benefits for utility shareholders, without sufficient benefits for customers paying the bills.
  • Assistance for customers struggling to make ends meet. The PSC required Alliant to develop a community solar program for low-income customers and make modifications to its forgiveness programs for customers who have missed bill payments. These were recommendations from Blacks for Political and Social Action of Dane County that were supported by CUB. The PSC directed Alliant to work with BPSA, CUB and others to tackle affordability and energy burden challenges.
  • Scrutinizing cost overruns for big solar plants. The Commission sent a strong signal that it will be looking closely at whether Alliant should recoup everything it’s seeking as solar projects it’s built have gone over budget.

The decisions reached Thursday will be formalized in a written order that the PSC will issue by the end of the year.

For more information, check out CUB’s Alliant Energy case information on CUB’s Active Cases page.