Utility rates

Wind energy driving down electric rates, posts big construction numbers

Posted on October 31, 2011. Filed under: Economic development, Utility rates, Wind | Tags: , , |


From an article in Wind Energy Weekly:

Wind energy is more affordable than ever, and new installations across the country are saving consumers money on their electric bills, as utilities rush to lock in long-term favorable rates, AWEA said in its third-quarter market report this week.

“This is what a successful business looks like with stable tax policy. Utilities are locking in a great deal for their electric customers while it’s available. We’re keeping rates down all across the U.S., even in the heart of the South,” said AWEA CEO Denise Bode, pointing to recent wind power purchases by the Southern Company in Alabama, Austin Energy in Texas, and Xcel Energy in Colorado as examples.

The U.S. wind industry installed just over 1,200 MW in the third quarter, and about 3,360 MW on the year so far—but has more than 8,400 MW under construction. That is more than in any quarter since 2008, as the federal Production Tax Credit has driven as much as $20 billion a year in private investment.

“This shows what we’re capable of: adding new, affordable electric generation,” said Bode. “Traditional tax incentives are working. There’s a lot of business right now, people are employed, and manufacturers are looking to expand here in the U.S.”

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Utilities warn of higher rates because of pollution rules

Posted on August 24, 2011. Filed under: Carbon, Clean Air, Climate change, Coal, Utility rates |


From an article by Tom Content published in the Milwaukee Journal Sentinel on August 19:

Two state utilities said this week new federal pollution rules will lead to higher electricity costs come January.

Wisconsin Public Service Corp. of Green Bay said its residential customers can expect an increase of more than $4 a month next year, including about $2 linked to the new rules designed to limit air pollution from coal-fired power plants.

The utility said it would see higher costs of about $32.6 million in 2012 from the Cross-State Air Pollution Rule that was finalized recently by the U.S. Environmental Protection Agency. That will result in rates going up by 6.8% instead of 3.4%, the utility said.

The U.S. Environmental Protection Agency last month finalized stronger regulations for Wisconsin and 26 other states aimed at curbing air pollution from long-distance sources.

Environmental groups praised the new rule because it would reduce acid rain and air pollution as well as help curb health effects from dirty air linked to coal plants. The EPA projected the rule will save up to 34,000 lives a year and prevent more than 400,000 asthma attacks as well as 19,000 admissions to hospitals. . .

The new rule has been in development for several years but the first phase of compliance hits utilities in 2012. WPS said it won’t have time to install pollution controls by next year at its plants, but will be able to comply by purchasing credits from other utilities that have cut emissions.

The utility also said it plans to operate its coal plants less next year than it otherwise would have, and will buy more power from the Midwest wholesale power market as a result, a move that it said is also a factor in higher costs for customers. . . .

On Thursday [August 18], Wisconsin Power & Light Co. [Alliant] of Madison said it would face an additional $9 million in costs linked to the air pollution rule. With the change, the utility is now seeking an increase in 2012 of $20 million, or 2%, utility finance manager Martin Seitz said in a filing with state regulators.

Todd Stuart, executive director of the Wisconsin Industrial Energy Group, criticized the increases, and he noted that large energy users like paper mills will see higher than average increases, compared with homeowners and small businesses. Paper mills served by WPS could see a 9% hike, he said. . . .

“Industry always cries wolf whenever EPA tries to reduce air pollution,” said Katie Nekola, lawyer with the conservation group Clean Wisconsin. “The fact is, the new rule will affect old, inefficient, unnecessary coal plants that should have been shut down long ago. The continued operation of those old units is costing ratepayers money, but you don’t hear industry complaining about that.”

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RENEW asks PSC to stop We Energies’ termination of renewable program

Posted on August 23, 2011. Filed under: Renewable energy - generally, Utility rates | Tags: , , |


From the testimony of RENEW presented by Michael Vickerman, who draws attention to the fact that We Energies is trying to defund its $6 million/year renewable energy development program without any justification. In fact We Energies doesn’t say anything about their actions. RENEW asks the PSC not to sanction this sleight of hand maneuver:

Q. What is the purpose of your testimony?
A. The purpose of my testimony is to discuss the May 2011 decision by We Energies to cancel a 10-year, $60 million commitment to support renewable energy development in its service territory. [***BEGIN CONFIDENTIAL***]  [***END CONFIDENTIAL***] (Exhibit __ (MJV-1)).

My testimony includes a recommendation to the Commission that it not allow We Energies to reallocate in 2012 the $6 million per year it had committed to spend on renewable energy development activities for other purposes. [***BEGIN CONFIDENTIAL***] [***END CONFIDENTIAL***]

Q. What is RENEW’s interest in this proceeding?
A. [***BEGIN CONFIDENTIAL***][***END CONFIDENTIAL***] RENEW is also a founding member of the We Energies Renewable Energy Collaborative (“WEREC”), the stakeholder body that has helped We Energies to achieve its voluntary renewable energy goal (5% by 2011) and maximize the value of its 10-year commitment to build, largely from scratch, a strong renewable energy infrastructure within its service territory. The collaborative, consisting of Midwest Renewable Energy Association, Citizens Utility Board, American Wind Energy Association, Wisconsin Energy Conservation Corporation, Customers First Coalition, and the 16th Street Community Health Center, has been working since 2002 to shape and guide We Energies’ renewable energy program. I think I can speak for all of the nonprofits in the collaborative when I say that our combined efforts and resources produced the strongest and most innovative utility-run renewable energy program in the state. Until We Energies announced its decision to terminate it, the program it had developed was widely regarded as one of the most successful utility-administered renewable energy initiatives in the nation.

Q. What was the basis of We Energies’ $6 million per year commitment to renewable energy?
A. I will quote from Jeff Anthony, who, as a We Energies manager in 2005, submitted testimony in the utility’s 2005 rate case (Docket No. 05-UR-102) providing details regarding We Energies’ request to recover $6 million per year in costs associated with planned renewable energy development activities:

 In its first “Power the Future” filing in early 2002, [We Energies] made several commitments to renewable energy. Among those commitments was that, subject to regulatory approval and cost recovery, the Company would spend an additional $6 million per year to achieve a target of 5 percent of Wisconsin retail load served by the year 2011. With reference to this commitment, the PSCW in its November 10, 2003, Order in the “Power the Future” docket, stated: “As part of the PTF proposal, WEPCO has committed to a goal of obtaining 5 percent of its energy from renewable resources by 2011. This is more than twice the renewable portfolio standard set forth under Wis. Stats. § 196.378, which requires that at least 2.2 percent of each electric provider’s retail energy must be from renewable energy resources by this date. WEC has also declared its intent to spend up to $6 million per year for ten years on emerging technologies and activities, to encourage the development of renewable resources.

Q. We Energies launched its Renewable Energy Development program in 2002. Why did the utility wait until 2006 to begin spending $6 million per year on the program?
A. As a condition of its WICOR merger, the Commission imposed a five-year rate freeze on We Energies that expired on January 1, 2006.

Q. Did We Energies receive approval on its request to recover $6 million for renewable energy development costs?
A. Yes, it did. It also received approval from the Commission in 2007 to spend $6 million per year on its renewable energy development program in 2008 and 2009, and it also received approval in 2009 to spend $6 million per year on its renewable energy development program in 2010 and 2011. All told, We Energies has sought and received permission to spend up to $36 million on the renewable energy program it has developed in consultation with WEREC.

Q. Did We Energies produce a “Renewable Energy Development” program plan for the PSC’s review?
A. Yes. In 2006, We Energies created a fully fleshed-out program plan and presented it to the PSC that September, building on the summary table it had submitted in the previous rate case. The program plan contained a diverse portfolio of renewable energy projects and initiatives. We Energies also committed to hiring an outside firm to perform an independent assessment of all of the elements and initiatives set forth in the Renewable Energy Development program plan.

Q. What elements of We Energies’ Renewable Energy Development program do you consider to be particularly successful?
A. Several of We Energies’ customer incentives and tariffs were unique in the way they complemented Focus on Energy’s renewable energy program. For example, We Energies was the first utility to: (1) offer a solar energy-specific buyback rate; (2) increase the net energy billing capacity ceiling for small wind systems generators to 100 kW; and (3) support renewable energy-specific conferences and events such as Solar Decade held in Milwaukee. Perhaps the most innovative element in We Energies’ program, however, was its special incentive for nonprofit customers seeking to install renewable energy systems. Every three months, We Energies would solicit proposals from schools, religious institutions, local governments, nature centers and other nonprofit entities to co-fund new renewable energy systems on their premises. This We Energies incentive supplemented Focus on Energy grants and cash-back awards. It was designed to overcome the inability of these nonprofit entities to capture federal renewable energy tax credits to offset their own system acquisition costs. As a result of this unique incentive, there are more renewable energy systems serving nonprofit customers in We Energies territory than in any other utility territory. This initiative has an educational component to it as well; We Energies posts real-time production data from these systems on its web site. (Exhibit __ (MJV-2)).

We Energies was also the first Wisconsin utility to field a large solar initiative which supported a total of one megawatt of photovoltaic generating capacity on seven customer rooftops. All told, We Energies’ support of solar energy, including solar hot water systems, helped foster the convergence of a solar industry cluster in southeast Wisconsin consisting of such companies as Helios USA, Johnson Controls, Caleffi Solar, Hot Water Products, and Sunvest.

Q. In what other ways did We Energies’ program benefit ratepayers?
A. We Energies has a number of renewable energy systems 10 kW and above that are interconnected to its distribution system. (Exhibit __ (MJV-3)). Depending on the specific tariff through which We Energies acquires the generation, many of these installations, including most if not all of the biogas generation facilities in its service territory, are a source of Renewable Energy Credits, that, beginning in 2012, can be banked to help the utility meet its 2015 target under Wisconsin’s Renewable Energy Standard. That supply cushion could become very valuable to We Energies if an extended interruption occurs with a major supply source of renewable electricity. Also, the preponderance of solar PV systems in We Energies territory was a contributing factor enabling We Energies to weather July’s heat waves without setting a new record for system-wide peak demand.

Q. Did RENEW have any advance knowledge of We Energies’ unilateral decision to prematurely terminate its Renewable Energy Program?
A. At WEREC’s May 11, 2011 meeting, We Energies representatives disclosed to the collaborative the company’s internal decision to unilaterally and prematurely terminate the program. There had been no discussion of such an outcome between We Energies and any of the other collaborative members prior to the meeting. We Energies’ representatives assured us that the decision was final and irrevocable. Indeed, by the time We Energies got around to dropping this particular bombshell on WEREC participants, program termination was already a fait accompli. One day later, an announcement on the termination appeared on We Energies’ web site.

Q. Has We Energies provided any information to the Commission explaining its unilateral decision to prematurely terminate its program?
A. No, it has not. We Energies has yet to offer an explanation for its decision in this proceeding. In fact, We Energies is not explicitly asking for permission to discontinue funding for this initiative at this time. Instead, the program’s suspension is merely assumed within its proposed suspension of certain regulatory amortizations for 2012. This suspension for the test year would appear to set the stage for termination of the program pursuant to Wis. Admin. Code ch. PSC 137.

Q. Why should the Commission reject We Energies’ decision to prematurely and unilaterally terminate its Renewable Energy Development program?
A. There are several persuasive reasons for not sanctioning We Energies’ decision to unilaterally and prematurely terminate its Renewable Energy Development program. One, this proceeding, to date, is devoid of any justification by We Energies for this abrupt change of course. Two, the Commission has in three previous rate cases approved the $6 million per year earmarked for supporting renewable energy development activities. Nothing has happened between the most recent approval of funds for this initiative and today that warrant a lesser amount of funding for this initiative, let alone its outright termination. [***BEGIN CONFIDENTIAL***][***END CONFIDENTIAL***] In other words, there is a trust issue here that should not be summarily dismissed.

Five, the Commission staff audit in this proceeding revealed excess revenue for the test year of more than $85.8 million under the proposal submitted by WEPCO compared with adjustments proposed by Commission staff. “In other words, these proposed adjustments indicate that applicants are proposing to defer $85.8 million more than is necessary to achieve no change in base rates.” Accordingly, there is no valid basis for We Energies to contend that it must terminate or suspend its renewable energy program with a relatively small annual budget of $6 million. We Energies could cover program costs 14 times over with its revenue surplus. Six, this initiative is an important source of renewable energy development and innovation throughout We Energies’ service territory, providing support for customer-sited renewable energy installations, conferences, workshops, research and development activities, demonstration projects, and advanced renewable buyback rates. Although the accomplishments of this program over the past five years are a good start, there is still much to be achieved. Termination of this program would be a severe blow to area contractors, businesses, and manufacturers that invested in new production capacity and expanded their workforce in direct response to the favorable climate for renewable energy that We Energies had created in its service territory. Allowing We Energies to abruptly terminate its renewable energy initiative without cause would send a strong signal to these businesses and other prospective market actors that they should focus their renewable energy development work in out-of-state markets, where policy commitments are durable enough to survive the whims of utility managers.

Q. Does this complete your direct testimony?
A. Yes it does.

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Sierra Club urges Joint Finance Committee to support increased energy efficiency investments

Posted on December 14, 2010. Filed under: Economic development, Energy Efficiency, Energy Policy, Focus on Energy/Public Benefits, General, Utility rates | Tags: , , |


From a news release issued by the Sierra Club – John Muir Chapter:

Madison: The Joint Finance Committee will consider the Public Service Commission’s (PSC) recent recommendation to increase Focus On Energy Funding today in the State Capitol. The PSC recently voted to
increase investment in Focus on Energy (FOE) and set new goals that together would decrease energy use 1.5 percent annually by 2014.

The Sierra Club strongly supports this common-sense investment in energy efficiency that will create thousands of jobs and save customers money on their utility bills. For every dollar invested in energy efficiency, homeowners and businesses have saved around $3. FOE has created over 16,000 jobs and saved homeowners and businesses over $275,000,000 since its inception in 2000.

Under the proposed Focus on Energy investment, ratepayers can expect to save about $15 per month on their energy bills over the next 4 years. Increasing Wisconsin’s commitment to energy efficiency programs will also create at least 4,000 jobs each year. Approving goal-based increases in energy efficiency will reduce our dependence on fossil fuels.

“Creating goal-based energy efficiency funding for Focus on Energy will create thousands of jobs and decrease the $16 billion we sent to other states to fuel our energy needs in 2008,” said Shahla M. Werner, PhD, Director, Sierra Club John Muir Chapter. “Supporting the Public Service Commission’s ecommendations will clean up Wisconsin’s air and create thousands of jobs at a time when our economy most needs this type of forward-thinking invest investment,” said Caryl Terrell, Energy Efficiency Team Chair, Sierra Club – John Muir Chapter.

The Sierra Club strongly disputes the negative claims by Wisconsin Manufacturers and Commerce. There is a key provision for industrial users that caps contributions at 2005 levels, and investing in efficient equipment protects industries from price spikes. Independent analysis also shows that although rates may go up with increased energy
efficiency investment, bills go down. The Sierra Club urges the media to check the claims of the opposition.

“Examining their shaky claims will reveal that the facts related to real Wisconsin jobs, real energy savings, and real reduced operating costs are with us,” added Werner.

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MGE Rate Filing Rewards Fossil Fuel Use, Penalizes Renewable Energy

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


FOR IMMEDIATE RELEASE
September 16, 2010

MORE INFORMATION
RENEW Wisconsin
Michael Vickerman
608.255.4044
mvickerman@renewwisconsin.org

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.” (more…)

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What’s the point of increasing a product’s price if it will not increase revenues?

Posted on September 8, 2010. Filed under: Renewable energy - generally, Utility rates |


Summary of direct testimony submitted by RENEW Wisconsin witness Michael Vickerman in Madison Gas & Electric’s pending rate case (3270-UR-117), in which MGE asks authorization to increase the killowatt-per-hour price of electricity in the company’s Green Power Tomorrow program:

— Madison Gas & Electric (MGE) operates an award-winning renewable energy subscription program called Green Power Tomorrow. It has achieved one of the highest customer participation rates of any voluntary program in the country. Green Power Tomorrow has nearly doubled the supply of renewable energy serving MGE. In 2009 the volume of renewable energy purchased by Green Power Tomorrow subscribers displaced the production of more than 95,000 tons of carbon dioxide from fossil energy plants.

— MGE and all of its customers benefit from this reduction in CO2 production.

— MGE proposes to increase the program’s premium from 1.25 cents/kWh to 2.00 cents/kWh, effective January 1, 2011. This would constitute a 60% increase. MGE’s premium had been 1.00 cents/kWh until January this year.

— The proposed increase is not driven by rising renewable energy costs. MGE’s renewable energy costs have remained constant. The proposed increase accounts for the decrease in the wholesale price of fossil energy this year. The ongoing slump in fossil energy costs is expected to last through the 2011-2012 rate cycle.

— Green Bay-based Wisconsin Public Service (WPS) is also seeking approval from the Public Service Commission to increase its renewable energy premium, from 1.25 cents/kWh to 1.50 cents/kWh. The cost of wholesale power is essentially the same for both utilities. This raises the question, why is MGE’s request so much larger than WPS’s request?

— MGE is also seeking a 10% increase in general rates, for reasons that have absolutely nothing to do with its renewable energy supplies.

— MGE admits that a substantially higher premium would depress subscription volumes. In fact, MGE’s 2011 forecast for Green Power Tomorrow assumes no increase in program revenues. In other words, MGE is expecting the fall-off in purchases to cancel out the price increase.

— Some business customers have already cut back on their purchases, while others are planning to drop out of Green Power Tomorrow in anticipation of a hike in the premium.

— Here is the $64,000 question: what is the point of increasing one’s product price if doing so will not increase revenues? (more…)

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RENEW opposes WPS’ proposed green-pricing increase and asks for small-wind tariff

Posted on August 20, 2010. Filed under: Utility rates, Wind | Tags: , |


From the testimony of Michael Vickerman in opposition to the request of Wisconsin Public Service Corporation to increase the cost of renewable energy purchased by customers in the NatureWise green-pricing program:

The purpose of my testimony is threefold: (1) to discuss how basing buyback rates on locational marginal pricing (LMP’s) penalizes low-risk renewable energy sources; (2) to encourage Wisconsin Public Service Corporation (WPS), with the support of the Commission, to establish a net energy billing tariff for small wind energy systems up to 100 kilowatts and (3) to urge the Commission to hold WPS’s NatureWise premium at 1.25 cents/kWh.

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