Stability Amid Pandemic: MG&E Settlement Would Leave Electric Rates Unchanged in 2021

CUB reached a settlement with Madison Gas & Electric in its 2021 rate case to keep electricity costs from going up in a time of pandemic and economic pain.

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The draft settlement was filed with the Public Service Commission on Friday and will be reviewed by the PSC in the coming weeks and months.

Under the proposal, electric rates and bills will be unchanged in 2021, remaining at levels lower than 2018.

This marks the second straight settlement CUB has negotiated with MG&E under the settlements law passed by the Legislature in 2018.

The COVID-19 pandemic was a critical factor driving negotiations this year. COVID-19 has affected all areas of the economy, including both utilities and their customers. Finding a way to keep electricity costs from going up in a pandemic was a goal for CUB and MG&E in this settlement.

Here at CUB we’re glad that we were able to arrive at a settlement that provides a way to keep electricity rates flat while also limiting rate impacts to natural gas customers. It also gives the utility flexibility to manage costs driven by COVID-19 and limit costs for fuel to help provide savings down the road.

The proposed settlement agreement also carries forward many of the terms CUB negotiated with MG&E two years ago, such as holding the line against increases in the customer charge and maintaining the lowest profit level of the large utilities in Wisconsin.

MG&E has also committed to collaborate with CUB to assess the energy burden of those who struggle the most to pay their energy bills, especially during this year of pandemic, recession and uncertainty. CUB and MGE will use that information to try to develop effective programs to assist the most vulnerable utility customers as we go forward.

“We all need to keep focused on the needs of those who are struggling the most, and we hope this can be a step toward doing just that.”

The electric rate settlement takes advantage of credit balances from fuel and federal tax costs MG&E has over-collected to help offset increases linked to new solar projects and projected lower sales due to COVID-19.

In addition, employee pension costs were driven up by downswings in the stock market earlier this year. This increase wouldn’t be collected from customers in 2021. It’s hoped that these pension costs could be much lower if the market continues to improve.

The agreement also calls for a change that could benefit customers if MG&E collects too much from customers in fuel costs. Currently, utilities retain 2%  more than they budgeted for fuel burned in utility power plants. Under the proposed settlement, MG&E would only retain 1% more than the budgeted fuel cost sum in 2021. As Wisconsin utilities have regularly over-collected for fuel costs in recent years, it’s hoped that this will help to offset future  possible rate increases. 

The agreement also includes new rate programs, including a Bring Your Own Device program that rewards customers who save energy on hot summer days if they have a smart thermostat linked to their air conditioning system. MG&E also plans to introduce a flat bill rate pilot for customers who choose to pay a flat monthly rate for electricity from renewable energy resources, and an electric vehicle charging program for companies or organizations with a fleet of EVs. 

Wisconsin Industrial Energy Group, University of Wisconsin-Madison and Renew Wisconsin joined MG&E and CUB in this settlement agreement.

More information: MGE Settlement Agreement August 2020

Read more case documents on the PSC website.