Milwaukee Rising

After neatly blocking full public participation in the debate over Wisconsin Power and Light’s request to give industries and businesses a break in their electric rates, the Public Service Commission proceeded to use a logic that defies logic to give WP&L almost everything it sought.

(First, full disclosure: the Wisconsin Citizens Utility Board, which fights for reliable and affordable electricity and telephone service on behalf of Wisconsin customers, is suing to block the ill-considered WP&L program, and I am on the CUB Board. This post, though, was not vetted or approved by CUB and I’m not representing the organization here.)

The utility argued that it wanted to offer lower rates to companies that, among other things, would leave the WP&L service territory if they didn’t get them. WP&L at first proposed that any industry seeking a break in its electricity bill be required to submit an affidavit stating that the lower rate would play a significant role in the firm’s decision to stay in Wisconsin.

The utility contended that, golly gee, companies wouldn’t lie about a thing like that just to lower costs and increase profits!

Yah, right, WP&L, what planet have you guys been living on?

The commission rejected WP&L’s  proposal, then made a very puzzling decision —  it said that it will decide which firms are in so much trouble they should get lower electric rates.  The commission, in approving the WP&L giveaway, said it can “investigate the customer’s financial status and the customer’s opportunities to move operations out of Wisconsin.”

Well. The commission and its staff may be made up solely of really great guys and gals, but that does not make them experts in reviewing firms’ balance sheets or in deciding which firms are most likely to leave. Here is the PSC’s organizational chart — with no little box for corporate financial expertise. We’ve all learned to our   bitter economic regret in recent years that even experts can be fooled by companies with something to hide — why on Earth would the PSC think itself qualified to root out the truth?

The lower rates also would be available only to firms that received at least $500,000 in government assistance during the previous two years, the commission ruled. The money would have to come one of roughly 30 programs (ranging from the state’s Best Employees’ Skills Training program to location in a tax incremental financing district)  specified in WP&L filings, or it could come from some other program approved by the commission.

Why would receiving government assistance qualify a company for lower electric rates? That might be a puzzler for most people (isn’t one handout enough?), but the commission opined in its final decision that receiving assistance will verify either that a specific project that increases demand for electricity “will be a lasting economic improvement” or that the $500,000 requirement will offer “an equivalent independent verification of the customer’s economic stability.”

The PSC does not however, offer a scintilla of evidence that being in a TIF District or getting a loan from a government revolving fund provides “independent verification” of anything more than a firm’s knowing how to take advantage of government programs. Besides, if a company gets half a million in government funding, but still needs help from the electric company, isn’t that a sign of economic weakness, rather than stability?

A big question, of course, is who would pay for the lower utility rates that corporate customers get.  The danger is that utility largess for corporations will eventually mean higher utility bills for other customers, including residential customers who are suffering greatly in the current downturn. Governments, including school districts and municipalities already slashing jobs while trying to maintain services and reasonable property tax rates, likely would face higher utility bills as well. Think about it — if this program is fully implemented, your average Joe and Jane WP&L Customer will pay at least twice for it — once through higher payments for the electricity they use at home, and once through higher property taxes they pay for local governments’ electricity use.

And yet, this still is not all that is wrong with the program or the PSC’s reasoning. More to come.