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.

It’s hard to know where to start with all that it wrong with the Public Service Commission’s toadying decision to allow Wisconsin Power and Light give corporations a discount on their electricity rates.

Two of the commission’s three members voted to approve the plan, which is likely to result in higher utility rates for residential users. In its decision, the majority accepted flimsy evidence and indulged in some seriously flawed logic to give WPL and some of its industrial customers what they wanted. More on that in future postings.

Today’s topic is the way the commission slammed the door on full public participation in the rate-setting process. The Citizens Utility Board and Clean Wisconsin, groups that wanted to fully participate in the decision-making, were not allowed to do so. (Full disclosure – I’m on the board of CUB, which fights for reliable and affordable electricity and telephone service on behalf of Wisconsin customers. This post, though, was not vetted or approved by CUB and I’m not representing the organization here.)

There are a lot of big deals about this case. It’s a huge precedent – if corporations get rate breaks in WP&L’s service territory, you can bet your light fixtures they will be looking for them in other areas of the state as well. It’s also a big precedent procedurally – if the PSC gets away with its inadequate handling of this case, then it will be easily able to limit public participation in other cases that come before it. That would be a very, very bad thing.

The PSC did allow the groups to submit comments, but they were denied other powers that participation in a “contested case” would have allowed: legal discovery to determine the actual need for corporate utility rate breaks in the WPL service territory; development of expert testimony to identify concerns with the proposal, including potential harm to residential customers; and presentation of legal arguments.

The commission’s reasoning in limiting participation by CUB and Clean Wisconsin was ludicrous. From its final decision in the case:

Because the Commission has not yet officially voted to issue a notice for this matter, the Commission’s current review of WP&L’s proposed EDR (economic development rate) is neither a proceeding nor a docket….. the rules for intervention…do not apply until the Commission votes to open a docket.

Got that? The folks representing residential ratepayers don’t get to participate fully because the commission didn’t vote to open a docket, even though, by the way, the commission’s staff assigned a docket number. The commission also said that WP&L was simply requesting a rate decrease and that the commission traditionally has not opened a docket when a rate decrease is requested. That contention is bogus, though. WP&L was proposing an entirely new rate structure that only would reduce rates for some customers. That some, by the way, did not include residential ratepayers. You know, the people who have been out of work lately.

While those folks were muzzled during the proceedings, WPL was allowed to present its case fully, in several filings with the commission. And — surprise! — after giving full consideration to one side in the case, the commission issued a written final decision giving WPL what it wanted. Yet the commission contended in that decision:

In the case at hand, WP&L did not request the Commission open a docket when it filed its EDR proposal, and the Commission is handling this matter informally. As a result, the requests that CUB and Clean Wisconsin filed do not meet the standards for intervention….”

It’s unclear how such a formal final decision, complete with docket number, sprang from such an informal handled issue. It’s also unclear where the commission got the authority to informally handle the matter.

Commissioner Lauren Azar, in her dissent, to the decision said the informal decision-making process is not described in the laws governing utilities and the PSC.

“Because this is neither a docket nor a proceeding, the Final Decision concludes that the rules of intervention do not apply,” she wrote. “But, without knowing the legal framework and authority for an informal process, I do not know what procedural rules apply and whether the Commission followed them.”

CUB has sued the commission over the commission’s gift to WP&L’s business clients. CUB alleges in its suit, among other things, that the PSC should have allowed CUB to more fully participate in the proceedings that resulted in PSC’s kowtowing to the utility.

That suit seeks a reversal of the PSC’s decisions to slam the door in CUB’s face and to give rate breaks to business. Stay tuned.