Mid-Year Update on Coal and Nuclear Costs, and Rate Cases
We’re almost halfway through a strange and tumultuous year, and that makes now a good time to update you on a number of our cases at the Public Service Commission. Here’s a look at some of the cases we’re tracking:
Coal plant retirement costs: CUB will be filing comments this summer on the Strategic Energy Assessment, a report that comes out every other year that serves as a snapshot for where Wisconsin stands on a number of issues, from energy supply and demand to rates and affordability. New wrinkles this year include special attention given to decarbonization of Wisconsin’s electric sector.
As utilities look to shut down coal plants to cut carbon emissions, CUB is emphasizing the “elephant in the room” when it comes the clean energy transition. What we mean by that is addressing extra costs customers are saddled with when utilities continue to earn full profit from old plants no longer needed to keep the lights on.
After all, when we move from one house to another we stop paying the mortgage on the first one. However, the utilities still want customers to keep paying for their old house they’re moving from. We tackled this issue last year in the We Energies rate case, and reached a settlement to reduce ratepayers costs tied to the Pleasant Prairie coal plant. The Milwaukee utility pledged to file an application to refinance the Pleasant Prairie pollution control expenditures to a lower rate. We want that filed soon. Meanwhile, Alliant Energy just announced that its Edgewater coal plant in Sheboygan will shut down by 2023. That’s another case where you can expect CUB to weigh on this issue to help reduce costs for customers.
$900 million in solar: Alliant Energy’s Wisconsin Power and Light utility has filed an application to expand its supply of solar energy through six projects across the state, at a cost of $900 million. CUB and the PSC will have to evaluate the need for the new generation capacity, and whether the proposal is cost-effective and economic for customers.
Alliant last month opened its new natural gas-fired power plant in Beloit, so it has enough energy to meet customer demand today. But Alliant has also announced plans to shutter the Edgewater coal plant in Sheboygan.
Rate case updates: Alliant Energy and Madison Gas & Electric this year were expected to file rate cases covering the years 2021 and 2022, but things are shaping up differently.
Citing the COVID-19 coronavirus pandemic, Alliant is opting not to file to increase rates at this time. Instead, the utility has proposed a one-year extension of the rate freeze that CUB and others negotiated with the utility two years ago. CUB is evaluating the proposal. The freeze would be for 2021 only, and Alliant is expected to come back for another rate case next year.
MG&E has informed the PSC that it intends to negotiate a settlement with CUB and other groups instead of a full rate case application for 2021-22. We will keep you updated on this case.
Nuclear costs rising precipitously: You may recall that CUB negotiated a rate settlement last year with We Energies that helped limit the size of the rate hike that hit customers’ bills in January. One of the reasons bills did rise was an unsustainable escalation built into the Point Beach power purchase agreement (PPA). We Energies in 2007 sold the nuclear plant on Lake Michigan to NextEra Energy Resources and buys back the power from the plant.
Significant increases in the price of Point Beach power are now hitting customers every year, and We Energies this month filed a proposal to raise prices in 2021 – citing Point Beach as a primary driver of increasing costs.
Point Beach increases each year through the early 2030s are a significant cost driver for We Energies rates, and We Energies pledged last year to work with CUB, the PSC staff and Wisconsin Industrial Energy Group on alternatives to the rising tab facing Point Beach customers.