Category Archives: Public Service Commission

Suburbs want economic development rate for Milwaukee water

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Will Milwaukee residents end up subsidizing corporate / industrial water use in the far suburbs? Unfortunately, that possibility exists in the Milwaukee water rate case now pending before the Public Service Commission.

The Milwaukee Water Works is seeking an economic development rate for major water users in the city that would give those users a lower water rate. The idea is that the industrial / corporate customers would use up some of the Milwaukee Water Works’ excess capacity (there’s a lot of it) and maybe create some jobs along the way. The danger with allowing some customers to pay less, of course, is that other customers — like residential water customers — might well have to pay more to compensate for the shortfall. Since, as the Journal Sentinel reported in July, water use is highest in the the central city due to building and pipe conditions, the poorest people will be billed proportionately the largest amounts for the corporate water subsidy.

The Water Works’ proposal for an economic development rate would apply only to the city of Milwaukee. Suburban customer would need to seek their own economic development rates under the city’s proposal. Lawyers representing  Mequon, New Berlin, Wauwatosa, West Allis, Menomonee Falls, Shorewood, Brown Deer, Butler and Greendale — known collectively as the “wholesale intervenors” — don’t like that idea much.

“The Wholesale Intervenors believe it would be discriminatory to provided an EDR (economic development rate) only to qualifying users within MWW’s retail area,” the group said in a brief filed with the Public Service Commission.

The city, the suburbs argue,

…cannot “have its cake and eat it too.” MWW and the City include the cost of the excess, unused capacity in its rate base, and ask the Commission to require that all ratepayers,including the wholesale customers, pay the carrying costs for this capacity. Yet, MWW and the City then seek to turn around and treat the excess capacity as a local asset the City can use to direct regional job growth to the City. If the excess capacity is to be considered an asset solely of the City, then the wholesale customers should not be expected to share in the cost of continuing to retain this excess capacity.

If the wholesale communities are expected to pay for the excess, unused capacity in MWW’s system, qualifying EDR users located in the wholesale communities should also have access to the EDR discount.

If the PSC buys the suburbs’ argument, then the suburbs would pay the Milwaukee Water Works less for their communities’ total water consumption, according to the brief.

“The amount the wholesale customer pays to MWW would…be similarly reduced to reflect the EDR reduction,” the brief said.

The ultimate impact of the proposed corporate rate breaks depends on whether suburban residential customers subsidize the lower rates in their own communities. But it appears entirely possible that corporations in the city and the suburbs get the breaks, which the poorest Milwaukee residents subsidize to the greatest proportional extent.

Santa Fe a water role model

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Wow. Let’s do it. From Newsweek:

While floods inspire tent-pole news coverage, the American Southwest has been quietly struggling with the opposite problem: a near-crippling drought. For the first time, water in the Lake Mead Basin, which feeds much of the region, is in danger of falling into the “shortage” zone, according to recent federal estimates. And the National Weather Service is predicting the worst seasonal drought since the mid-1950s.

There is, however, one city that’s still all wet. Santa Fe has a water surplus large enough to support at least 160 new houses thanks in part to an innovative conservation program approved in 2007: for every new toilet installed, developers must pay for 12 low-flow toilets in existing homes (roving plumbers have literally gone knocking on doors in search of customers). Now, with virtually no commodes left to retrofit, the city has moved on to washing machines, showers, and urinals. Though environmentalists worry about desert sprawl, water experts say it may be only a matter of time—and thirst—before other cities follow Santa Fe.

(There’s a good chance, unfortunately, that conserving water would lead the Milwaukee Water Works to seek even bigger rate breaks for heavy water users in an effort to encourage water use because the utility has too much capacity. Yeah, I know it defies logic and common sense, but it is exactly what is happening in a case before the Public Service Commission.)

PSC ponders Internet phone regulation

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The Citizens’ Utility Board filed a request this week to intervene in a Public Service Commission investigation to determine just how much and what kind of regulation is appropriate for fixed Voice over Internet Protocol services.VoIP allow people to make phone calls over the Internet and has grown rapidly. This year, there are roughly 112 million VoIP lines globally, according to one estimate.

CUB contended in its filing that the commission’s determination in the case “will directly impact CUB’s members who subscribe to or may subscribe to interconnected VoIP services.”

This case will be interesting to watch, and there is a lot at stake for both customers and service providers.

The cable companies and telecoms are seeking input as well, with Verizon being the most aggressively against any sort of regulation thus far.

“Verizon Business contests this Commission’s jurisdiction to regulate any form of VoIP and/or IP-enabled services, and will argue that the “appropriate level of regulation for fixed, interconnected Voice over Internet Protocol (VoIP) services offered in Wisconsin” is none,” the communications giant wrote in its request to intervene.

Also seeking an in to the case are the Voice on the Net Coalition, which describes itself as a trade association; the Wisconsin Cable Communications Association, which says it is a trade association that includes Charter Communications, Comcast, and Time Warner Cable; Time Warner Cable Information Services (Wisconsin), LLC; and Northeast Communication of Wisconsin, Inc., a communications operator that does business as NSight.

It’s sure bet that CUB, which represents the interests of residential and smaller utility ratepayers, will have a very different outlook on the issues than the telecom firms, which, as anyone who ever subscribed to cable tv knows, do not necessarily give much of a rip about their customers or protecting them from outrageous fees and charges.

Full disclosure: I’m on the CUB Board. This blog, though, is independent and CUB does not vet its contents.

We Energies’ woes

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The JS’ Tom Content has an interesting story today about the mess at the We Energies Oak Creek power plant. In short, the plant doesn’t work for a lot of the time. (The good news is that the coal monstrosity’s nonfunctionality means it is polluting less.)

Ratepayers are paying significantly larger bills to pay for the problem-plagued plant. Yes, we get to pay truckloads of money for something that isn’t working yet! We Energies promises that the many fixes needed won’t hit ratepayers’ bills, too. From the story:

… customer groups remain troubled, and auditors at the Public Service Commission are looking into the problems as part of their audit of the company’s pending rate case.

The recurring problems raise the question of whether the utility should have accepted the keys to the plant when it did, said Charlie Higley, executive director of the Wisconsin Citizens’ Utility Board, which represents residential and small business customers.

“When you lease a car, you lease one that works. You wouldn’t want to pay for a car that’s not working under a lease arrangement,” Higley said. “That’s the same analogy that should be applied here. The ratepayers should not be paying for this plant until it’s properly operating.”

Higley has a great point. Why didn’t We Energies find the problems before it accepted the keys and turned on the juice? When did We Energies find the debris the story refers to? (Full disclosure: I’m on the CUB Board. This blog, though, is independent.)

 Can ratepayers get a partial refund on construction costs?

 

 

 

The story relies for perspective on Charlie Higley, executive director of the Citizens Utility Board, which represents mostly residential ratepayers before the Public Service Commission and in the courts. CUB is a small, statewide organization that relies heavily on donations from members.

Fixing the game for Mercury Marine

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Wisconsin Power & Light wants to give a $4.8 million discount on electric rates to Mercury Marine, which slashed wages and raised health care costs for workers a year ago.

If the Public Service Commission approves the request, it’s highly likely that some of the folks who payer higher electric rates so Mercury Marine does not have to will be the very folks who saw wages cut and health care costs increased by Mercury last year.

Is this country great or what?

Here’s the kicker. WP&L knew it wanted to give a discount to Mercury even before it finished designing the program that would allow it to do so. The Public Service Commission, in a remarkably bad decision, approved the program, excluding the public from full participation along the way.

Yes, a major utility made promises in private to a specific corporation, then designed a program to benefit that corporation and then went to compliant regulators to get the program approved.  which the regulators did, benefiting the corporation but stiff-arming other ratepayers. (I have no idea whether the PSC knew the program would benefit Mercury.)

Like I said, is this a great country or what?

WP&L didn’t mention Mercury Marine in its original, November 2009 application seeking approval for the program. The utility simply said 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.

In documents filed with the Public Service Commission this month, however, WP&L made it clear that it had Mercury Marine in mind before the program was even out of the planning womb.

06/03/09 – Alliant Energy (WP&L’s parent company) “proposal for assistance to Mercury Marine” sent to the Fond duLac County Economic Development Corporation

• 06/09/09 – State of Wisconsin initial economic incentives offer received, verbal reference by Governor Doyle of “Alliant Energy incentive for Growing Wisconsin”

• 06/11/09 – City / County of Fond du Lac, Wis., initial economic incentives offer received, written reference to Alliant Energy “proposal for assistance to Mercury Marine” targeted at $6.0 million over five years (The value now is estimated at $4.8 million over five years.)

• 06/15/09 – Phone call between Steve Cramer (CFO of Mercury Marine) and Bruce Kepner of Alliant Energy to better understand the “Growing Wisconsin” program

And then there is this:

When Mercury announced on Sept. 4, 2009, its decision to close its Stillwater, Okla., facility, it had written indications of commitment from the City of Fond du Lac, the County of Fond du Lac, the State of Wisconsin and Alliant Energy. In all cases, these written indications of commitment were subject to successfully negotiating contracts and receiving the necessary approvals (whether City Council, County Board, State Legislature or in the case of Alliant Energy – the PSC).

…In all cases, representations were made subject to final negotiations, and are subject to obtaining necessary approvals. In all cases, the actual program and incentives are very different today than what was envisioned in Q3, 2009. However, the total value committed to Mercury Marine in Q3, 2009, by the City, County and State of $123 million will be achieved at $122.7 million = 99.8%.

…Mercury relied on representations by the City, County and State. That reliance included a rate reduction in Mercury’s electric bill under the “Growing Wisconsin” program. Mercury was aware that the program was not yet fully developed, and that the program would require the approval of the Public Service Commission, just as the City incentives required approval of the City Council, the County incentives required the approval of the County Board, etc.

Mercury Marine was hit hard in the recession, as many companies and individuals were. Its fortunes likely will improve when the economy improves, with or without a utility rate break. Pushing Mercury Marine’s business costs on to other ratepayers, including other financially struggling companies, is almost beyond comprehension. Why not have Mercury Marine’s insurance premiums paid by employees of Briggs & Stratton? Why not make Kohl’s Corp. pay for Mercury’s equipment costs? By making the WP&L service area friendlier to Mercury, WP&L and the PSC is making the same area less friendly to every other business.

This isn’t simply a bad program; it’s a bad precedent that may well have companies all over the state racing for approvals to dump utility costs on to others before others dump utility costs on to them.

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.