Category Archives: Public Service Commission

WE Energies rate hikes blasted in PSC cases

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We Energies’ rates were not popular with ratepayers, even before the rates’ full impact kicked in this month after some cushioning credits expired, according to public comments filed with the Public Service Commission.

And the utility’s request for another 1.4% hike — the fourth sought or received in 2010 — has them steaming.

(Meanwhile, We has just declared a huge, 30% increase in its shareholder dividend and two-for-one stock split, according to the JS.)

“The question I wish to raise to the Public Service Commission regarding the WE Energies rate increase is: “What measures has WE Energies taken to reduce its internal business expenses such as staff salaries, benefits, pensions, etc. in addition to payments to shareowners of the company?” wrote Terrence Bolda, of Menomonee Falls. “Since I moved back to Wisconsin in 1988, I have never heard or read about any staff layoffs, pay freezes or reductions, pension reductions or other measures taken to reduce the cost of doing business. It seems that the utility is immune from these measures when everyone else (expect government) has been forced to take them. I request that you first demand WE Energies to do this before approving a rate increase of any kind.”

“Please do not allow this rate increase,” wrote Public Busier, of Salem. “We are hurting in Wisconsin and this increase will put even more of a burden on us. Please listen and help the people you serve.”

“I would like to file a complaint against WE Energies raising their rates,” wrote Suzanne Derge, of Neosho. “I am paying an average of $400. a month for electricity to my home and barn.This is not including the heat, just for electricity!!! Some months it has gotten as high as $500!!! This is ridiculous. We just can’t afford an increase. I used to be able to heat my old house with electrical heat and budgeted $165 (that was just 13 years ago).”

The comments were filed two cases pending before the Public Service Commission. In one, We Energies argues that its fuel rates went up more than expected, but did not seek a rate increase for 2010 beyond the total increase of $146.3 million it already won for the year. In the other, We Energies asks for a 1.4% rate increase to bring in another $38.4 million in 2011.

The comments show that many people from all over the We Energies service area are just fed up with handing money over to the utility. The Citizens Utility Board also is opposed to the PSC granting the full rate increase.

“More than 50 WEPCO customers filed comments in this docket; all of them opposed to the rate increase request, CUB said in a brief.

“Of course, few people are happy when utility rates increase, but that does not mean that those customers’ concerns should be dismissed,” the agency continued. “The difficulty in addressing the comments in this case is that those cases are confined to fuel costs where potentially offsetting decreases in other areas of utility operation are not examined.”

CUB is a member-supported, nonprofit organization that represents residential, farm, and small business customers of electric, natural gas, and telecommunication utilities before the Legislature, regulatory agencies, and the courts. Full disclosure: I am on the CUB board. This blog, though, is independent and CUB does not vet its contents.

“We Energies is a company that has a legal monopoly and never suffers unprofitable years,” wrote C. Ziffer, of Union Grove. “Its management is well paid already — astonishingly so to me, a professional who makes less than $40,000 a year. These rate increases ARE a hardship to people like me. In good conscience, if you do TRULY serve the public, DO NOT approve their request for a rate increase. If they truly need more money, they should pay the CEO less than the millions he currently makes.”

“Has WE ever attempted to cut back on expenses?” wrote Cheryl Kellerhals, of Kenosha. “Why do they advertise on the radio? We do not have a choice in our utility provider so there is absolutely no reason for them to advertise. How about some salary freezes for top level executives? The people subjected to WE’s outrageous rates have not received salary increases, salary bonuses, ESOPs, increased dividend income; some people are lucky to even have their job. Yet WE continues to cry about needing more of our money. For What? WE needs to cut back on expenses like the rest of us; better known as budgeting.”

“Please explain to the public how WE Engeries can report a huge record profit for 2009, yet you just granted them 2 increases this year,” wrote Linda Pfeiffer, of New Berlin. “Senior citizens did not get a SS increase this year. Many Seniors have frozen pensions – ie: what you get when you retire is fixed for life. Unemployed people are struggling to just survive – the working people are struggling with many other problems. YET – the President of WE Engeries had a pay that increased by 23% and says it is not paid by rate payers. This was donated by who? If the company has a record profit – and the President has a huge rate increase in bonuses – WHY was it necessary to raise rates?”

“I worked in construction for 45 years before I retired and over the years I feel the utility should have an efficiency review,” wrote Jack Brody. ” They send out two truck, six men to work on a transformer on a pole.  Two of the men actually do the work while the other four sit in the truck and drink coffee with the engine running. Before you think of giving them anymore raises you should ask them about this.”

You can read all the comments here and here.

The graphic wind turbine testimony

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Gov. Scott Walker is proposing a new requirement that wind turbines be at least 1,800  feet from nearby homes, rather than the 1,250 feet now required in a rule taking effect this year. Walker may not be sincere in his proclaimed desire to “protect the private property rights for all Wisconsin citizens.” (He does, after all, favor freeway expansion projects that would have huge negative noise, dirt and flooding impacts on private property owners. But, after all, what does consistency matter when there are campaign donors involved?)

Wind turbine advocates say Walker’s proposal would put hundreds of millions of investment dollars at risk; those who have homes or businesses that might be near the structures say they just want to sleep at night.

Anyhow, the Public Service Commission spent a lot of time recently coming up with rules to regulate wind farm siting. Among those folks offering testimony was Lynda Barry, a nationally-recognized and totally awesome cartoonist.  Her testimony — she advocates for a half-mile setback — is worth reading for itself. But it is the illustrations — actual Lynda Barry work! — that make the document special. It is here.

The PSC’s Milwaukee water rate decisions

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The Milwaukee Water Works went before the Public Service Commission with a pretty weak case for a major rate hike.  The good news is that PSC members made it pretty clear that they won’t support the money grab the Water Works is trying to make. The bad news is that two of three members of the PSC signalled support of a program to support water consumption by industry, likely subsidized by residential ratepayers.

First, the rate case. As the JS reported this week, the Water Works was looking for an average increase of 27% in Milwaukee, with widely varying increases in the suburbs. Think about it: 27%. The Water Works has a lot of excess capacity that isn’t generating revenue, but that still must be maintained, and that costs money. But the folks at the city who thought raising prices astronomically would help didn’t really think it through. Raising rates so gosh-darned much would only discourage water use — fewer people would use hoses to water their gardens, or would wash cars in their driveways, etc. etc. The city could do itself more harm than good by making people resist higher water bills by cutting water usage. (Ironically, the city might unintentionally do the environment a nice favor by discouraging water use, but that is not the Water Works intent.)

The city also hurt the Water Works’ cryin’ the blues case when it snagged $3 million in surplus Water Works revenue to fill a hole in this year’s city budget, a fact that suburban opponents of the water rate increase hammered home to the PSC. They also said that Milwaukee Water Works uses a lot more cash financing for capital projects than do other water utilities. There are arguments for and against cash financing, but there is no doubt the Water Works could lower its immediate cash needs by borrowing more for capital projects.

Finally, and it’s not a small point, the city’s own Legislative Reference Bureau reported that Water Works will cut expenses by 4% “without compromising service.”

All those things argue against the rate increase requested by the city. Does the Water Works need more money? Most likely. But 27%? C’mon. Let’s talk about the ability to pay of city residents, especially those in the central city with the lowest incomes and the leakiest — and thus more expensive — water service.

Unfortunately, two of the three commissioners seem ready to pile on residential ratepayers by approving an “economic development rate,” which basically gives a price break to industries that dramatically increase their water usage.Yes, a reward for behaving in a potentially environmentally irresponsible way.

This handy dandy favor for the big guys will quite possibly  shift additional costs on to residential and small business ratepayers. The idea behind the economic development rate is that the additional water use will absorb some of the Water Works excess capacity while also creating jobs, but if there has been a solid proposal for measuring  the impact of corporate water subsidies on job creation, I haven’t seen it. (If there is one out there, someone please point it out to me.) Is everyone just going to assume that any job added at any firm getting a water rate break was added because of the water rate break? That would be pretty silly.  It would make a lot more sense for the city to do a performance audit of its existing water marketing strategies and fixing those before asking residential ratepayers to chip in to supply industries with water.

Citizens Utility Board calls it correctly — again

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The Citizens Utility Board is fighting to keep your money in your pocket and not in the pockets of extremely well-paid utility executives. CUB issued this statement yesterday:

Consumers Should Not Pay for Million-dollar Bonuses for Utility Executives

Statement of Charlie Higley, Executive Director

The Citizens Utility Board calls on the commissioners of the Public Service Commission to make sure that consumers don’t pay for millions of dollars of bonuses, stock options, and other “incentive compensation” lavished on utility executives.

PSC Chairperson Eric Callisto and Commissioners Mark Meyer and Lauren Azar are considering making changes to administrative rules known as the “fuel rules,” which lay out a process by which utilities can change electricity rates when prices for coal, natural gas, or other fuels for making electricity unexpectedly change in price.

We urge the commissioners to include a provision that would prevent the utilities from manipulating the fuel rules in ways that would force utility customers to pay for millions of dollars of bonuses and other incentive compensation given to utility executives.

Combined, the incentive compensation given to the five highest paid executives at Alliant Energy, Madison Gas & Electric, We Energies, and Wisconsin Public Service Corp. in 2009 was $44 million, on top of salaries of $10 million.  The incentive compensation paid to these 20 utility executives was much larger than the entire 2009 budget of $28 million for the Public Service Commission, a state agency with about 150 staff.

Utilities should not be able to use administrative rules to force rate payers to pay for these outrageous bonuses, especially since the PSC routinely and rightly prohibits utilities from charging customers for incentive compensation in rates.

With many people out of work, and stagnant or declining wages for those with jobs, it would be worse than heartless for the PSC to initiate rules, or for the Legislature to approve them, that would build in a loop-hole allowing utilities to rob rate payers of millions of dollars to pay for executive bonuses.

CUB is a member-supported, nonprofit organization that represents residential, farm, and small business customers of electric, natural gas, and telecommunication utilities before the Legislature, regulatory agencies, and the courts. Full disclosure: I am on the CUB board. This blog, though, is independent and CUB does not vet its contents.

Milwaukee and the water rate increase

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Ya gotta love it. Milwaukee is arguing before the Public Service Commission that it needs a significant — averaging 27% in the city — water rate increase. The argument has been going on so long and is so heated that the Milwaukee Water Works has to cut back a bit to make up for the lost projected revenue.

Cut to the 2011 city budget, slated for adoption today. Ald. Robert Donovan has proposed a 1% across-the-board cut for all departments, a budget amendment that has virtually no chance of adoption. But in its analysis, the council’s own Legislative Reference Bureau writes in response to the amendment that

“It should be noted, because of delays in its rate increase petition, the Water Works will cut operating expenses — including salary and overtime expense — just over 4% without compromising service. No one is suggesting this is a model for the City as a whole, but it does seem to indicate significant cuts can be made, at least in the short-run, without jeopardizing service levels if properly motivated.”

So why does the Water Works need such a big rate increase again?