MADISON – State regulators sent a clear signal: We Energies needs to increase savings for customers as it transitions away from coal-fired power.
The state Public Service Commission on Tuesday asked We Energies to prepare a comprehensive analysis on how to save customers money as coal plants retire prematurely in the transition to cleaner fuels.
“All utilities have been adequately put on notice that this is going to be an issue,” PSC Chairperson Rebecca Cameron Valcq said during the PSC discussion of the We Energies coal plant costs.
For We Energies, more than $657 million, including $450 million for pollution controls, will still be on the books when the original Oak Creek coal plant shuts down. We Energies plans to shut down the older plant and convert the newer coal plant in Oak Creek to burn natural gas rather than coal.
The decision came as the PSC authorized a 2.5% increase in customers’ bills, on top of the double-digit increase We Energies homeowners and renters saw earlier this year. Taken together, residential customers’ electricity bills in 2024 will be up about 14% from 2022.
The PSC trimmed the utility’s request in some areas, but an increase in the projected cost of coal for 2024 offset some of those reductions. As a result, the PSC authorized an increase of $82 million, $2 million below the utility’s request.
“A key takeaway from this case is that utilities need to sharpen their pencils and justify every dollar they’re looking to spend, especially as they plan for an aggressive building program expected to cost billions of dollars over time,” said Tom Content, CUB executive director.
In this year’s case, CUB’s regulatory team highlighted the need for greater analysis and scrutiny of costs in several areas, including the potential savings when coal plants shut down, overruns on solar projects, and the We Energies storm hardening program.
We Energies sought advance approval of a $700 million storm hardening construction program, but the PSC opted instead for more scrutiny and ongoing oversight every two years of the utility’s planned distribution system upgrades.
On other issues affecting We Energies customers, the PSC decided to:
- Not include solar project cost overruns in 2024 rates: We Energies noted it experienced cost overruns for large solar projects, but the Commission agreed with CUB that whether to include those in rates should be decided in a future case.
- Look at better ways to divvy up costs between small customers and big business in the future: Earlier this month, the Commission agreed with CUB that a fresh look at how the grid operates hour to hour and over the year should be reflected in how cost increases are divvied up among small customers and big businesses. The grid is changing as more renewables are installed. CUB identified a need to bring cost allocation up to date to ensure that large energy users pay their fair share,
- Stay focused on energy burden and affordability: The PSC has several other investigations pending that could lead to more options for customers facing disconnection because they can’t afford their bills. That includes modifications to the We Energies forgiveness program, the Low Income Forgiveness Tool, as well as an investigation into other forms of customer assistance.
The decisions reached Tuesday will be formalized in a written order that the PSC will issue next month. We Energies is expected to apply for another rate increase, for 2025-26, next spring. CUB will be involved in that case as the consumer advocate for We Energies residential customers and small business customers. More information is at cubwi.org/active-cases.
