The Wisconsin Public Service Commission recently voted 2-1 to allow We Energies to increase fixed charges on all residential bills, decreasing the financial benefit for customers who use less energy. The PSC also granted the utility permission to pay less for the power generated by customers with rooftop solar.
But the story doesn’t end there. Cleantech advocates are now preparing to bring suit against the two commissioners who voted in favor of the changes, and they are confident the decision will be overturned.
Last week’s vote increases monthly fixed charges for We Energies customers from roughly $9 to $16, making them among the highest in the country. The variable rate will be reduced from $0.139 per kilowatt-hour to $0.1349 per kilowatt-hour.
The approved change in net metering will switch the program from annual netting to monthly netting, and reduce the price credited for excess generation from the current 14 cents per kilowatt-hour to 3 cents per kilowatt-hour.
All customers with solar systems on their property will also have to pay We Energies $3.80 per kilowatt per month. The average solar system size in Wisconsin is 4 kilowatts, bringing average annual fees to $182 per year.
There are roughly 600 existing solar customers in We Energies territory. These customers will be grandfathered into the new rate plan and will not have to pay any new charges for ten years. The increases will apply immediately for all new customers.
We Energies also attempted to ban outright the third-party ownership of solar, a request which the PSC denied. If it had been approved, Wisconsin would have become the first state in the country to block a type of solar projects from interconnecting and net metering with the grid.
Bryan Miller, vice president of public policy for Sunrun and co-chairman of The Alliance for Solar Choice, sees We Energies’ actions as a “complete abuse of power.” We Energies (also known as WEPCO) is in the middle of a $9 billion acquisition of Integrys Energy Group Inc. and is trying to weed out any competition as it angles to become one of the largest monopolies in the country, according to Miller.
Earlier this year, Integrys Energy Services, a subsidiary of Integrys Energy Group, took steps to enter the residential solar market.
According to We Energies, the higher fixed monthly charges and solar fees were necessary to offset revenue losses as customers go solar and become more energy-efficient, thus buying less power from the utility, We Energies spokesperson Brian Manthey told Bloomberg News.
‘‘When our customers produce power, they pay less for the fixed costs of the grid,’’ said Manthey. ‘‘Solar is coming down in cost, and it should be able to walk on its own.’’
But with just a few hundred solar customers in We Energies territory, Miller said We Energies' claims don’t stand up.
“It’s not a question of eliminating a solar market in Wisconsin; [there's] simply not one right now,” said Miller. “It has great potential, but WEPCO is trying to prevent that.”
“The [commission’s] decision will not stand,” he added. “We will sue, and we will win.”
The most damning evidence, he said, is one of We Energies’ own studies which determined that solar benefits all ratepayers. That’s because the utility can profit from solar’s long-term fixed costs, as opposed to being impacted by the fluctuating prices of fossil fuels. PV also reduces the burden on the distribution system because it demands less electricity from the substation, and at the transmission level, “We Energies realizes cost savings when PV is able to reduce the peak demand.”
Bucking the national trend
Corey Singletary, the PSC’s staff analyst, said in his testimony in August that there’s no record to support the solar charges or substantial fixed price increases.
“I do not believe that the utility has provided sufficient support for its proposal to replace all of its current net metering tariffs…with a new offering,” he said.
With respect to how customer-owned generation rates, Singletary said, “WEPCO’s approach treats [distributed generation] as purely marginal, and does not adequately reflect long-term avoided generation capacity costs.”
The decision to approve We Energies’ rate changes may have had something to do with the current makeup of the PSC board. Chairman Phil Montgomery and Commissioner Ellen Nowak, who voted in favor of the changes, were both appointed by Republican Governor Scott Walker. Commissioner Eric Castillo, who was appointed by the previous Democratic governor, voted against the changes.
The commission also voted 2-1 to increase fixed charges for customers of Wisconsin Public Service Corp. by 83 percent, form $10.40 to $19. In the coming weeks, the PSC will take up a rate case from Madison Gas & Electric, which is pursuing an 82 percent hike.
But stances on the issue are not entirely divided along party lines. Mark Honadel (R), former chair of Wisconsin’s Assembly Committee on Utilities and Energy, wrote an editorial last month in opposition to the rate cases.
Wisconsin is also departing from the trend in the rest of the country. “To date, most utility proposals for vastly increased fixed charges in other states have been denied, so this marks a rare loss for solar advocates, as well as for those advocating energy efficiency,” said Shayle Kann, director of GTM Research.
Cleantech advocates have warned, however, that the solar fight in Wisconsin could spill over into other states. The increase in fixed rates could also set a disconcerting price signal that ultimately incentivizes more energy use, said Tyler Huebner, executive director of the nonprofit organization RENEW Wisconsin.
“In the longer run, it’s just going to mean more investment is needed for more power plants if it keeps going in this direction in future years,” he said.
By increasing the fixed rate, We Energies can lower its electrical rate, making it cheaper for customers to use more electricity. That will also serve to make We Energies new Elm Road coal plant more profitable, Huebner added.
Those who oppose the rate case outcome will have 30 days to file suit after the PSC releases its written order, which is expected to take place next month.