Dive Brief:
- Wisconsin Public Service Corp asked its Public Service Commission (PSC) for a 32% increase to its fixed monthly charge on residential customers from $19 to $25. The utility argues the 83% increase in fixed charges it won from regulators last year — increasing charges to their current level from $10.40 — is no longer adequate.
- In 2014, the PSC also granted We Energies a 75% monthly fixed charge increase for residential customers from $9.13 to $16 and a Madison Gas & Electric 85% increase from $10.29 per month to $19 per month.
- The utilities argue the rate increases align with fixed costs for system and infrastructure maintenance while their per kWh revenues are diminishing with customers’ greater use of distributed generation and energy efficiency. Environmental and consumer advocates say the increases are regressive and discourage conservation and the spread of distributed resources.
Dive Insight:
The PSC is taking input on the WPS proposal and is expected to rule by the end of 2015. It is also considering a proposed fixed charge increase from $8 to $18 for the Xcel Energy Wisconsin subsidiary Northern States Power.
Wisconsin’s rural electric cooperatives are also increasing fixed charges, but a review of other states by Renew Wisconsin found the state to be outside ratemaking norms. Of 35 utilities proposing increased fixed charges in 2014 and 2015, commissions required 14 to keep charges unchanged and 18 were allowed increases of between $0.01 and $4.30 a month. The three approved by Wisconsin’s PSC in 2014 were between $6.83 and $8.71, significantly higher than in other parts of the nation.
Utilities seeking sharply increased monthly fixed charges are deviating from long-established rate design principles, according to "Smart Rate Design for a Smart Future," a new report from from the Regulatory Assistance Project. A recent discussion of utility rate designs between one of the authors of that report and an Edison Electric Institute executive at a regulatory conference this month, however, revealed that the trend in the sector overall may be to move beyond high fixed charges and toward more comprehensive rate structures.
