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.