Wisconsin Measure Is Intended to Scale Down We Energy Profits, Allow PSC Review

At the Wisconsin State Legislature on March 2, Republican lawmakers drafted a measure that would rein in profits that the state’s largest utility, We Energies,  makes from its coal-based power plant in Oak Creek and its natural gas-based generating station in Port Washington, according to a report by the Milwaukee Journal Sentinel.

Based on a copy of the drafted measure forwarded to Retail Energy Buyer by the office of State Senator Duey Stroebel (R-Saukville), who is a sponsor, “This bill allows the Public Service Commission to modify or terminate contracts for public utilities to lease electric generating facilities from their affiliates, if the modification or termination protects and promotes the public interest. …Under current law, the PSC may modify or terminate a leased generation contract which the PSC has approved only as specified in the contract or the PSC’s order approving the contract.”

That limitation on the PSC’s authority would be eliminated, allowing the commission to review rates for the two plants built during the energy shortages in the late 1990s and reduce them..

At that time, the Journal Sentinel reported, a key aspect of financing the projects was to allow a 12.7 percent return to be earned from investing in the projects – and to be set in stone for 25 to 30 years. The utility currently earns 12.7 percent on $3 billion it has invested in the project.

“Today, we put ratepayers first,” said Senator at a Capitol news conference on the same date.

But, according to the local news outlet, a spokesperson for We Energies said the measure was unconstitutional. Brian Manthey told the newspaper that the bill would interfere with power-generating contracts that are already in place.

“The bill is legally flawed,” Manthey said. “It violates the Wisconsin and U.S. Constitutions by impairing our existing contracts.”

If the bill were adopted, it could affect profits earned by We Energies and Madison Gas & Electric, a co-owner of the Oak Creek plant, as well as WPPI Energy of Sun Prairie, another co-owner.

Sponsoring the bill in addition to Stroebel are Senator Rob Cowles (R-Allouez), Representative Jim Ott (R-Mequon), and Representative Adam Neylon (R-Pewaukee). They said allowing the plants to be subjected to the same reviews as others would help lower rates for manufacturers and homeowners.

“It will end the regulatory favoritism that exists in the current system,” Stroebel said at the press conference. “No utility should be able to shield a portion of its operations from the oversight of the PSC.”

Wisconsin has the highest residential electric rates in the Midwest and within Wisconsin, MG&E and We Energies have the highest rates among the state’s investor-owned utilities.

Nearly 15 years after the Oak Creek and Port Washington plants were approved, Wisconsin has more power supply available than customers need, the newspaper said, and cost pressures and low-interest rates have led regulators around the country to scale back on utility profits.

The draft has not been completed yet or officially introduced.

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