PSC allows $117 million fuel surcharge

  • August 11, 2023
640 450 Tom Content

State regulators this week voted to allow Wisconsin Power & Light (WPL), to impose a $117 million surcharge linked to higher 2022 fuel costs, despite the fact that the utility failed to follow the terms of a contract for one of the fuels whose prices spiked.

Customers of WPL, a subsidiary of Alliant Energy Corp., will see an increase on their bills come October, and that increase will be in place through the end of 2025.

WPL experienced abnormally excessive fuel costs linked to the surging price of natural gas last year, as well as coal delivery challenges for its Columbia power plant in Portage.

CUB argued that the state Public Service Commission should reduce the size of the fuel surcharge, owing to WPL’s failure to abide by a contract provision requiring WPL to submit to its railroad company an annual estimate of how much coal it would need for the Columbia plant. WPL admitted to its lack of compliance with the contract requirement but downplayed its importance.

“This was a missed opportunity to send a signal to monopoly utilities that they need to be better stewards of customers’ hard-earned money. When utilities don’t abide by contracts it undermines confidence that they are effectively managing things across the entire business,” said Tom Content, executive director of CUB. “If they can’t be bothered to do the little things right, what assurances do customers have when it comes to the big things?”

Alliant has a separate case in front of the PSC that would result in a significant rate increase for utility customers in 2024-25. CUB is actively involved in finding ways to bring down utility profits and pare back the size of the increases customers face in January.

Alliant residential customers will see increases of about 3% on monthly electric bills, starting in October, continuing through December 2025. Separately, in a general rate case to set rates for 2024 and 2025, Alliant is proposing an increase of at least 19% for residential customers. Find out more about that case here.

The coal delivery challenges at the Columbia power plant also contribute to surcharges that customers of Madison Gas & Electric and Wisconsin Public Service will see on their bills later this year. The two utilities are co-owners of the Alliant power plant.

Wisconsin’s energy sector is in transition. Alliant expects to shut down Columbia before July 2026, and retire its Edgewater coal plant in Sheboygan before July 2025. Other coal plants slated for shutdown include the original We Energies Oak Creek power plant south of Milwaukee, which was built in the 1950s and 1960s. That plant is currently slated to shut down in phases over the next 18 month in phases during 2024-25.

CUB is working in rate cases this year to help find ways for customers to secure more savings when coal plants shut down and help blunt the price impact of the solar, natural gas and battery storage projects that are replacing coal. Utilities shouldn’t be permitted to continue profiting from coal plants when they’ve stopped running and aren’t being relied on to keep the lights on.

Photo credit: Corey Coyle via Wikimedia Commons