MGE Rate Filing Rewards Fossil Fuel Use, Penalizes Renewable Energy

Posted on September 16, 2010. Filed under: General, Renewable energy - generally, Utility rates |

September 16, 2010

RENEW Wisconsin
Michael Vickerman

MGE Rate Filing Rewards Fossil Fuel Use, Penalizes Renewable Energy

RENEW Wisconsin, a statewide renewable energy advocacy organization, today called on Madison Gas and Electric (MGE) to scrap its pending request to substantially increase the cost of participation in its voluntary renewable energy subscription program.

RENEW contends that MGE does not need a higher renewable rate because the cost of energy supplying its award-winning Green Power Tomorrow program has not changed over the last 18 months and will not for the foreseeable future. The utility is seeking permission from the Public Service Commission (PSC) to increase the renewable energy rate from 1.25 cents to 2 cents per kilowatt-hour (kWh), a 60% increase.

If approved, the voluntary premium that MGE customers will pay for sponsoring more wind and solar electricity production will be significantly higher than what other Wisconsin utilities charge. In contrast, Milwaukee-Based We Energies charges a 1.38 cents/kWh premium to participate in its Energy for Tomorrow program. That rate, which received a slight upward adjustment in 2009, will remain in effect through 2011.

“Nothing about this price hike makes any sense,” said Michael Vickerman, Executive Director of RENEW Wisconsin. “Program costs haven’t changed. Wind and solar energy is no more costly this year than it was in 2009, and next year it will be more of the same. Therefore, Green Power Tomorrow’s premium should remain where it is today.”

As part of the upcoming hearings on this proposal, RENEW Wisconsin will introduce a new approach to setting the purchase price of renewable energy, one that would insulate customers from the whiplash of fluctuating fossil energy prices. RENEW Wisconsin’s proposal is supported by the City of Madison, a large purchaser of renewable energy and a party in the PSC proceeding.

Vickerman pointed out that a price increase of this magnitude is certain to drive down customer participation levels, which MGE itself has acknowledged in its filings. In fact, MGE anticipates little to no increase in program revenues even if the 60% increase is approved.

In testimony filed at the PSC, Vickerman stated that Green Power Tomorrow expanded rapidly in 2008 and 2009 after reducing its premium from more than 2.6 cents to 1 cent/kWh. In that period, the customer participation rate climbed to nearly 10%, the third-highest ranking among all U.S. utilities, according to the National Renewable Energy Laboratory. In 2009, the pool of voluntary renewable energy serving program subscribers was nearly as large as the supply of renewable energy required under Wisconsin’s Renewable Energy Standard, Vickerman said.

“Through their purchases, Green Power Tomorrow subscribers eliminated in 2009 the production of about 95,000 tons of carbon dioxide from fossil energy sources at no cost to nonparticipating ratepayers,” Vickerman said.

“Up until now, Green Power Tomorrow has been a relatively inexpensive way for customers to lower greenhouse gas emissions that come from burning coal,” Vickerman said. “But by doubling the cost of renewable energy in less than two years, MGE will effectively encourage customers to drop out of the program, and take possession of the unsold renewable energy credits for its own use. This is bound to alienate customers who wish to support renewable energy generation and reduce their own greenhouse gas emissions.”

The proposal to raise the renewable energy subscription rate, submitted as part of MGE’s application to raise overall retail rates by nearly 10%, will be the subject of hearings later in September. If approved, a typical customer subscribing at the 100% level in Green Power Tomorrow would pay $3.75 more per month beginning January 1, 2011.


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