staff@cubwi.org 625 N. Segoe Road, Suite 101, Madison, WI 53705

March 6, 2008: Assembly Threatens Wisconsin with Risks of Nuclear Power

For Immediate Release: March 6, 2008

Assembly Threatens Wisconsin with Costs

and Risks of Nuclear Power

MADISON – The Citizens Utility Board and Clean Wisconsin would like to thank the members of the State Assembly that voted yesterday against AB 346, which would repeal Wisconsin’s “nuclear moratorium.” AB 346 passed the Assembly on a 57 to 38 vote.

AB 346 would repeal a law (Wis. Stats. 196.493) that has been on the books since 1983. The law, known as the nuclear moratorium, is a sensible law that protects ratepayers and the environment from the costs and risks of nuclear power.

The nuclear moratorium does not ban the construction of nuclear plants in Wisconsin. It simply requires that two criteria be met before the Public Service Commission of Wisconsin can authorize the construction of a nuclear plant. These two criteria are that:

  1. A waste repository is available for radioactive waste created by Wisconsin reactors, and;
  2. A nuclear plant is economically advantageous to ratepayers in comparison to alternatives.

Unless nuclear power can pass these simple requirements, nuclear power plants should not be built in Wisconsin.

###

December 20, 2007: PSC Decisions Reduce Size of Rate Increase

For Immediate Release: December 20, 2007

PSC Decisions Reduce Size of Electric Rate

Increase Sought by We Energies

MADISON – The Citizens Utility Board commends the Public Service Commission of Wisconsin for substantially reducing the size of the electric rate increase that We Energies customers will have to pay starting in January 2008.

The three PSC commissioners today decided more than 100 issues involved with setting electric and natural gas rates for We Energies, which will take effect in 2008 and 2009. We Energies sought an increase of 7.5 percent in 2008 and an additional increase of 7.5 percent in 2009. A preliminary estimate based on today?s action by the PSC is that electric rates will increase by 3.5 percent in 2008 and another 3.5 percent in 2009.

Importantly, the PSC agreed with CUB that We Energies should not be allowed to charge ratepayers for $22 million associated with an outage of the Point Beach Nuclear Power Plant during 2005. In general, when utilities shut down plants for maintenance, they need to purchase power from other utilities to make up the difference. For this particular outage, the PSC agreed with CUB that We Energies was responsible for causing the outage to last longer than it should have, which resulted in We Energies purchasing an additional $22 million-worth of electricity. The outage lasted longer than planned because We Energies had not taken action for 23 years to comply with certain regulations of the U.S. Nuclear Regulatory Commission.

In addition, the PSC refused to allow We Energies to keep $70 million in proceeds from the sale of the Point Beach Nuclear Power Plant, which was sold to FPL Energy earlier this year. Instead, the PSC ordered We Energies to return this $70 million to ratepayers.

Lastly, the PSC reduced the level of profit sought by We Energies, which will result in a savings to ratepayers of $14 million. CUB has been urging the PSC to reduce utility profits for many years.

Fortunately for ratepayers, the PSC has been reducing utility profits for the past three years or so, although they still remain higher than utility profits in other states.

“Although customers of We Energies will see higher electric rates in 2008, the PSC made good decisions today that will substantially reduce the size of the increase,” said Charlie Higley, CUB executive director.

###

November 30, 2007: Ratepayers Should Not Pay For Mistakes at the Oak Creek Plant

For Immediate Release: November 30, 2007

Ratepayers Should Not Pay For We Energies’ Mistakes

at the Oak Creek Plant

MADISON – The Citizens Utility Board contends that ratepayers should not pay for mistakes associated with the $100 million cooling system for the Oak Creek power plant, currently under construction by We Energies.

Yesterday, a state administrative law judge ruled that the permit issued by the Wisconsin Department of Natural Resources for the plant’s cooling system, which extends nearly two miles into Lake Michigan, needs to be modified to meet tougher environmental standards. If the cooling system is unable to meet the environmental standards of the modified permit, We Energies will have to make major changes to the cooling system, potentially adding $200 million in costs to construct cooling towers.

CUB contends that ratepayers should not be forced to pay more for the cooling system than what We Energies’ projected when the utility received permission in 2003 from the Public Service Commission of Wisconsin to build the power plant.

As a part of its request to increase electric rates by 7% in 2008, currently pending at the PSC, We Energies is requesting $19 million to pay for continued construction of the cooling system. CUB contends that the cost of any additional construction on the cooling system should be at the risk of utility shareholders, given the great uncertainty caused by yesterday’s ruling.

###

November 14, 2007: PSC Shouldn’t Deregulate AT&T in the Dark

For Immediate Release: November 14, 2007

PSC Shouldn’t Deregulate AT&T in the Dark

MADISON – The Citizens Utility Board (CUB) today filed comments with the Public Service Commission of Wisconsin (PSC), urging the agency to continue monitoring the impacts of its decision to deregulate the pricing of basic phone service for AT&T customers.

Technically known as “basic local exchange service,” basic phone service provides customers with a dial tone, a line connecting the phone to the telephone network, the ability to make local calls, and access to long-distance service.

Two years ago, the PSC deregulated the prices AT&T could charge for basic phone service. The PSC essentially placed a bet that competition would restrain AT&T’s price hikes. The PSC hedged its bet by restricting the amount AT&T could increase rates during 2006 and 2007.

To determine the impacts of its decision, the Commission had its staff prepare annual reports on the impacts of its order deregulating AT&T’s phone prices.

Predictably, AT&T raised its rates from $8.20 to $10.78 on May 1, 2006, and to $12.50 on May 1, 2007. Starting December 1, 2007, all bets are off and AT&T can charge whatever it wants for basic phone service.

The annual reports prepared by PSC staff have provided valuable information on the impacts of phone deregulation. For example, land-line competitors to AT&T are providing service to fewer customers today than two years ago. AT&T itself is losing customers who use basic phone service, but whether AT&T’s decline in residential lines will continue remains to be seen once AT&T begins offering video television services.

CUB is urging the PSC to continue monitoring AT&T’s basic phone service for two more years, so it and the public can determine whether AT&T is fairly providing local phone service.

“Without continued reporting, the public will be hampered in knowing how price deregulation has impacted retail customers, especially low-income and disadvantaged persons. The PSC shouldn’t deregulate in the dark,” concluded Charlie Higley, CUB executive director.

###

September 18, 2007: Nuclear Power Plant Will Cause Higher Rates

For Immediate Release: September 18, 2007

Sale of Point Beach Nuclear Power Plant Will Cause Higher Rates, More Nuclear Pollution, and Loss of Control Over Wisconsin’s Nuclear Future

MADISON – The Citizens Utility Board and Clean Wisconsin strongly disagree with the decision made today by the Public Service Commission of Wisconsin (PSC) to approve the sale of the Point Beach Nuclear Power Plant to an unregulated subsidiary of an out-of-state utility holding company.

In a 2-1 vote the PSC determined that the sale of the nuclear plant was in the public interest.

We Energies, the owner of Point Beach, agreed to sell the nuclear power plant in December 2006 to a subsidiary of FPL Energy, Inc., a utility holding company headquartered in Florida. “The sale of Point Beach to an out-of-state corporation continues Wisconsin’s path down the misguided slope of energy deregulation,” said Charlie Higley, CUB executive director. “The sale will lead to higher energy costs for We Energies’ customers, more nuclear pollution, and loss of control over Wisconsin’s nuclear future.”

In testimony before the PSC, CUB and Clean Wisconsin contended that the sale would threaten the interests of Wisconsin residents and businesses by allowing an unregulated company to own and operate Point Beach. CUB and Clean Wisconsin argued that not only will electricity rates increase compared to We Energies continued ownership of the plant, but that the PSC will no longer have control over the future of the plant and oversight of nuclear waste generated and stored at the reactor.

“Today’s decision turns Wisconsin’s nuclear future over to out-of-state corporations,” said Katie Nekola, Clean Wisconsin energy program director. “The sale will result in a Florida corporation generating more nuclear waste on the shore of Lake Michigan for decades even though there’s no place to dispose of it, and the State of Wisconsin won’t be able to do anything about it.”

In today’s decision, the PSC imposed “conditions” that purportedly bind FPL Energy and any future owner of Point Beach regarding storage of nuclear waste at the reactor and the clean-up of radioactive contamination at the site when the plant ceases to operate.

CUB and Clean Wisconsin pointed out in briefs to the PSC that the “conditions” will not be enforceable, which means that FPL Energy or a new owner of Point Beach can pursue their business interests at the reactor without fear of enforcement by the PSC.

“Transferring control of arguably the most dangerous industry in Wisconsin to a business not regulated by the State defies common sense,” stated Higley. “Point Beach was built to serve the interests of Wisconsin’s energy customers, not the profit interests of an out-of-state company.”

###

February 8, 2007: PSC Approves Risky Merger between WPSR and Peoples

For Immediate Release: February 8, 2007

PSC Approves Risky Merger between WPSR and Peoples

MADISON – The Citizens Utility Board is disappointed with the decision made today by the Public Service Commission of Wisconsin (PSC), which approved the merger between WPS Resources Corporation and Peoples Energy Corporation.

WPS Resources Corporation (WPSR) is the holding company that owns Wisconsin Public Service Corporation, a regulated utility that sells electricity and natural gas in the Green Bay area. Peoples Energy Corporation (Peoples) is the holding company that owns two regulated utilities that sell natural gas in Chicago, namely Peoples Gas Light and Coke Company and North Shore Gas Company. WPSR and Peoples announced their intent to merge on July 10, 2006.

In proceedings before the PSC, CUB objected to the merger because mergers rarely if ever provide benefits to the ratepayers of the utilities involved in the merger. Like other utility holding companies that have proposed mergers, WPSR has made promises that “synergy savings” resulting from more efficient utility operations will outweigh the costs of the merger and provide benefits to ratepayers. In its filings in the proceedings, CUB pointed out that three-fourths of mergers fail to provide benefits to the acquiring company’s shareholders, let alone ratepayers, and that “synergy savings” rarely provide any benefit to ratepayers.

“Utility mergers almost always enrich utility executives while causing higher rates for ratepayers and the loss of jobs of utility workers, and this merger will probably turn out the same” said Charlie Higley, CUB executive director.

In addition to criticizing the often fictional “synergy savings” promised by utility management, CUB raised concerns about problems afflicting the utilities owned by Peoples. For starters, Peoples Gas Light and Coke Company and North Shore Gas Company had to provide a refund of $100 million swindled from their customers in a shady deal involving Enron Corporation. Next, the Peoples Gas utility has very old gas pipes, with some dating back to the Civil War. Not only have there been explosions on the Peoples Gas system, but repairs and replacement of old pipes located under the streets of downtown Chicago will be very expensive, posing liability threats to its new owners.

“The merger between WPSR and Peoples won’t provide benefits to Wisconsin ratepayers, and the PSC made the wrong choice in approving the merger,” concluded Higley.

###

January 11, 2007: PSC Correctly Rejects Special Rates for ERCO

For Immediate Release: January 11, 2007

PSC Correctly Rejects Special Rates for ERCO

MADISON – The Citizens Utility Board applauds the decision made today by the Public Service Commission of Wisconsin (PSC) to reject the requests by ERCO Worldwide and Wisconsin Power & Light Co. (WPL) to provide ERCO with special deals for lower electricity rates.

The decision came as part the PSC’s proceeding to determine the electricity rates that WPL can charge customers in 2007.

ERCO owns a chemical manufacturing plant in Port Edwards and buys electricity from WPL. ERCO was asking for lower electricity rates so that they could invest in equipment that would reduce emissions of mercury from the Port Edwards facility.

“All three commissioners agreed that the requests for special electricity rates for ERCO would not only be illegal, it would set a bad precedent that would encourage other companies to look for handouts from ratepayers,” said Charlie Higley, executive director. “CUB applauds the PSC for denying ERCO’s request that utility customers pay for pollution control equipment, which is the responsibility of ERCO’s shareholders, not ratepayers. CUB agrees that reducing mercury pollution is an extremely important goal, and we hope that ERCO will continue with its plans to reduce mercury pollution.”

ERCO had asked the PSC to approve a special contract with WPL to lock in a low electric rate that would only increase 4 percent per year, whereas ERCO’s electricity rates have increased on average 10% per year since 1997. This contract would have forced other WPL ratepayers to subsidize ERCO.

Also in this proceeding, WPL had asked the PSC to approve a special electricity rate for ERCO that would force other WPL customers to subsidize ERCO by at least $23 million over the next ten years. The PSC rejected both the ERCO and WPL proposals.

“CUB appreciates the Commission’s decision to defend 100-year-old principles of utility regulation that protect ratepayers from discriminatory deal making between utilities and powerful companies.”

The PSC also decided today that WPL’s electricity rates for 2007 would only increase by about 4 percent, instead of the 17.8 percent increase requested by WPL. Rates will rise less than requested because of lower prices for natural gas, and because all three commissioners agreed to lower the amount of profit that WPL can make selling electricity, another action applauded by CUB.

###

December 20, 2006: Point Beach Nuclear Power Plant Should Not Be Sold

For Immediate Release: December 20, 2006

Point Beach Nuclear Power Plant Should Not Be Sold

MADISON – The Citizens Utility Board is opposed to the proposed sale of the Point Beach Nuclear Power Plant, announced today by We Energies, which intends to sell it to FPL Energy, a utility holding company headquartered in Florida.

“If the sale of Point Beach is approved by the Public Service Commission of Wisconsin, electricity rates will increase,” said Charlie Higley, executive director. “The people of Wisconsin will lose any ability to oversee the operations of a nuclear power plant located on the shores of Lake Michigan,” continued Higley.

During the next year or so, the PSC will decide if the sale of Point Beach, a 1,033 megawatt nuclear plant located in Two Rivers, is in the public interest. CUB will oppose the sale in the proceedings at the PSC.

Although the terms of the sale have not been made public, CUB is concerned that Wisconsin ratepayers will pay higher rates because of the way electricity is bought and sold in the Midwest. Power plants not owned by regulated utilities are able to make huge profits in Midwest electricity markets. If the sale of Point Beach is approved, a large power plant will no longer be owned by a power company regulated by the PSC: FPL Energy would not have to return excess profits to ratepayers, as is the case for power plants owned by regulated utilities.

In addition to higher costs for ratepayers, the State of Wisconsin will lose jurisdiction over what is arguably the state’s most polluting industrial operation: Point Beach produces thousands of pounds of radioactive wastes every year, for which there are no safe means of disposal.

FPL Energy could run the plant to maximize profits instead of safety. The PSC would have no authority over whether investments should be made to keep the plant operating safely, or whether the plant should be shut down should problems arise regarding its operation. FPL Energy could potentially use the site to store nuclear waste from other nuclear reactors. FPL Energy could even sell the plant to another entity, all without oversight by the PSC and the Wisconsin public.

“If the PSC approves the sale of the Point Beach Nuclear Power Plant, the Commission will have taken another step toward electricity deregulation, which will mean higher electricity rates, more pollution, more profits for energy companies, and less control over energy policy by the people of Wisconsin,” concluded Higley.

###

November 13, 2006: WPL Ratepayers Should Not Bail Out ERCO

For Immediate Release: November 13, 2006

WPL Ratepayers Should Not Bail Out ERCO

MADISON – The Citizens Utility Board (CUB) recently filed a legal brief urging the Public Service Commission of Wisconsin (PSC) to reject proposals by ERCO Worldwide, Inc. and by Wisconsin Power & Light Company (WPL) that would force ratepayers to subsidize the operations of one of ERCO’s plants.

CUB made its filing in a proceeding at the PSC that will determine the electric rates that WPL can charge customers starting January 1, 2007.

ERCO owns a chemical manufacturing plant in Port Edwards and buys electricity from WPL. ERCO claims they need a subsidy to invest in technology that would reduce emissions of mercury from the Port Edwards facility.

“Although reducing mercury pollution is a laudable goal, forcing ratepayers to bail out polluters would not only be illegal, it would set a bad precedent that would allow other polluters to look for handouts from ratepayers,” said Charlie Higley, executive director.

In this proceeding, WPL has asked the PSC to approve a special electricity rate for ERCO that would force other WPL customers to subsidize ERCO by at least $23 million over the next ten years. Certain industrial customers could see their monthly bills increase by $450.

Meanwhile, in the same proceeding, ERCO has asked the PSC to approve a special contract with WPL that would lock in a rate that would only increase 4 percent per year, whereas ERCO?s electricity rates have increased on average 10% per year since 1997. This illegal contract would also provide a ratepayer subsidy to ERCO, especially if electricity rates continue increasing more quickly than 4 percent per year during the next 10 years, which is almost a certainty.

CUB urges the PSC to reject both the WPL proposal and the ERCO proposal. These special deals would directly undermine a bedrock principle of utility rate regulation that prohibits utilities from offering special deals to their customers.

“It’s simply unfair and against the law for customers to receive preferential treatment from their utility. Ratepayers should not be forced to pay for cleaning up pollution caused by non-utility businesses,” concluded Higley.

###

May 16, 2006: Flawed Design of Arrowhead Transmission Line Threatens Blackouts

For Immediate Release: May 16, 2006

Flawed Design of Arrowhead Transmission Line Threatens Blackouts

MADISON – The Citizens Utility Board (CUB) today asked the Public Service Commission of Wisconsin (PSC) to investigate flaws in the design of the Arrowhead-Weston transmission line that could result in damage to Wisconsin’s power plants and cause blackouts in the upper Midwest.

In a letter to the PSC, CUB states that as a result of engineering mistakes by Wisconsin Public Service Corp. (WPS), Minnesota Power Co., and American Transmission Co. (ATC), the Arrowhead line contains serious flaws in its electrical design which have never been eliminated even as construction on the line proceeds today. The line as designed is undersized in capacity and will not perform as expected and as ordered by the PSC in its decisions regarding the line in October 2001 and December 2003. The failure of the Arrowhead line to work properly when called upon could lead to major damage to power plants and cause region-wide blackouts in the upper Midwest.

“The Public Service Commission needs to investigate the flaws in the design of the Arrowhead transmission line and order the utilities to ensure that the line will prevent blackouts, not cause them,” said Charlie Higley, CUB’s executive director.

CUB has been involved in proceedings at the PSC regarding the Arrowhead line since it was first proposed by WPS and Minnesota Power in 1999. ATC became a co-applicant to the project in 2001. The PSC approved the project in October 2001 and again in December 2003. The line is being constructed by WPS under contract to ATC, which will own and operate the $420 million line when brought into service in 2008.

Larry Thiele, an independent consulting electrical engineer, authored an in-depth analysis detailing the design flaws of the Arrowhead line. Thiele’s analysis is attached to CUB’s letter to the PSC. Thiele was hired by CUB in 2003 to provide expert testimony regarding whether the Arrowhead line was properly designed. For the last several years, Thiele has voluntarily continued examination of the design and expected performance of the line.

Thiele’s analysis shows that WPS, Minnesota Power, and ATC failed to design the Arrowhead line to comply with industry standards and PSC orders that require a line to perform properly, especially while other emergency events (known as contingencies) are taking place.

In particular, Thiele’s analysis shows that the Arrowhead line will not work properly if an outage occurs on the King-Eau Claire-Arpin transmission line, the only high-capacity line connecting Wisconsin directly to Minnesota. Should the King-Eau Claire-Arpin transmission line drop out of service, the Arrowhead line is supposed to handle power flows from Minnesota without causing it or other transmission lines to carry too much power (known as “thermal violations”) or to cause unstable power flows that could inflict damage to power plants and cause blackouts (known as “voltage stability violations”).

Thiele’s analysis shows that the utilities failed to properly design the Arrowhead line to meet expected contingencies, especially ones that threaten the transmission system’s voltage stability. Thiele’s analysis concludes that the utilities:

* Failed to design Arrowhead with enough electrical capacity to prevent voltage stability problems;

* Plan to connect the Arrowhead line to the Minnesota transmission system at the wrong place, which will further aggravate the voltage stability problems caused by the undersized Arrowhead line;

* Failed to initially test for and detect the voltage stability problem in Arrowhead’s design, and when eventually discovered, failed to bring these concerns to the attention of the PSC during licensing;

* Failed to perform the proper analyses to determine whether the use of a special transformer, which is intended to partially compensate for Arrowhead’s insufficient capacity, will actually work to prevent voltage stability problems; and

* Designed Arrowhead in such a way that its operation in emergency conditions will be extremely complicated and prone to failure.

Last year, Thiele raised concerns about flaws in the Arrowhead line with the North American Electric Reliability Council (NERC), which is responsible for oversight of the reliable operation of North America’s transmission system. NERC ignored its responsibilities by rejecting Thiele’s complaint without investigation and telling him to take his reliability concerns back to the PSC.

CUB urges the PSC to investigate the design flaws in the Arrowhead transmission line and order the utilities to comply with its orders and with industry standards, otherwise the reliability of Wisconsin’s electric system will be threatened by this poorly-designed transmission line.

###