November 14, 2019: PSC Misses Opportunity to Protect WPS Customers from Weston 3 Overruns

The Public Service Commission on Thursday missed a great opportunity to secure savings for utility customers in northeastern and north central Wisconsin.

The rate decision by the PSC will require utility customers to pay for cost overruns plus profit totaling $89 million on a pollution control project that went 24% over budget. The project at the Weston 3 coal plant near Wausau was built by Wisconsin Public Service of Green Bay, and its customers will now foot the bill for these overruns.

“It’s deeply distressing that the Commission didn’t exercise its regulatory oversight of the utility in this case,” said Tom Content, executive director of the Citizens Utility Board of Wisconsin. “The utility failed to promptly notify the commission when the costs soared, and that came after the Commission asked the utility to do just that.”

The pollution control technology, known as ReACT, had never been deployed in the United States. At the time it was proposed, CUB and others were concerned that there were risks assocated with using novel technology such as this.

Not only was the utility slow in reporting the overrun but it also failed to specify in detail how the project went so far over budget. A pattern of poor management of the project was also clear, based on reviews of company emails and documents provided in this case.

“Given reporting delays and other problems, this is a case that warranted strong oversight,” Content said.

It was just five years ago that the Commission did find fault for this utility on this very project, when it disallowed $2 million linked to higher costs to get the power plant running with the new emissions control system.At that time, the PSC expressed frustration for not being informed in a timely fashion about the problems that could have saddled customers with higher costs.

Today’s decision came on a 2-to-1 vote. While all three commissioners decided that the utility’s overruns were prudent expenditures, Commission Chair Rebecca Cameron Valcq said the utility shouldn’t realize its full profit on the project in light of its delays in informing the commission about project cost escalation.

“We certainly hope that utilities are careful in managing costs for multi-million-dollar projects going forward, and we also call on the commission to exercise its oversight powers to compel the utilities to keep costs from spiraling out of control,” Content said.

The decision came as the PSC wrapped up its analysis of a rate hike proposed by Wisconsin Public Service. CUB, the utility and other groups reached a partial settlement, approved two weeks ago, that resolved most of the issues in the case.

“We’re still pleased that the rate increase facing WPS customers will be smaller than the utility proposed,” said Content. “But because of the overrun issues, the PSC failed to make a bigger dent in the size of the rate hike.”