We Energies customers will pay $3.50 more a month following PSC action - Milwaukee Journal Sentinel

We Energies customers will pay $3.50 more a month following PSC action

PSC apprroves We Energies electric rate hike, gas bills expected to be lower than last year
Karl Ebert

We Energies residential customers can expect to pay about $3.50 more a month for electric service under rates approved Tuesday by the Wisconsin Public Service Commission.

Even with the increase, household utility rates are expected to be modestly lower next year thanks to falling gas prices. The utility estimates winter heating bills will be about $10 a month lower.

The estimated 2.5% increase in the We Energies' residential electric rate follows an 11.3% increase in this year's rate that spurred uncommonly high public interest in energy costs and pressure from consumer groups and some lawmakers to control them.

In a statement, the utility said its rates still remain "well below the national average and in line with other Wisconsin utilities."

The rate decisions before the commission on Tuesday were a continuation of last year's rate case and limited to adjusting rates to account for changing fuel prices, cost overruns on solar and natural gas projects and a handful of other issues.

Affordability issues will be a focus next time

Commissioners, in approving the 2024 rates, made clear that they will be focused on energy affordability when the utility returns next year to set its 2025 rates.

That has always been a focus, but it is increasingly important as We Energies and other utilities undertake billions of dollars in spending to move from coal to renewable, cleaner and cheaper energy sources, PSC chairwoman Rebecca Cameron Valcq said.

WEC Energy Group, We Energies' parent company, projects $9.3 billion in spending on new electric generation facilities in the next five years, according to its recently released five-year capital plan. Including transmission and natural gas distribution projects, the company expects to spend $23.4 billion by 2028.

"We have continuously clarified that affordability and overall energy burden are increasingly important," Valcq said. "That's not to say that they never were important – they've always been important – but they continue to be important when we're looking at the impact of the utilities, generation building programs."

Commissioners zeroed in on several affordability issues ,including trying to ensure that customers aren't overly burdened by the costs of new construction, getting more detailed cost and benefit analysis of major projects, and adjusting how costs are allocated among user groups in future rate cases.

The current allocation formula resulted in an outsized increase for residential electricity customers over two years, about 14%, while rates for industrial customers rose less than 10%. The rate increase approved Tuesday followed that formula.

More: WEC moves up date to stop burning coal, reaffirms 2024 shutdown for first Oak Creek units

Commissioners pushed consideration to next year of how to handle the remaining debt on two coal-burning units at the Oak Creek power plant that are scheduled to shut down in May. They took similar action in other utilities' rate cases this year.

We Energies will still owe $400 million for pollution controls that were installed about a decade ago on those units and two others that will close in 2025. The total outstanding debt on all four units is $656 million and refinancing all or part of it could save customers tens of millions of dollars over time.

Those iniatives and similar directives from commissioners in other rate cases signal to Wisconsin utilities that they will need "to keep their pencils pretty sharp and not pad their asks in the future," said Tom Content, executive director of the Citizens Utility Board.

The rate case also resulted in the PSC opening separate dockets focused on two affordability initiatives:

Expansion and improvement of We Energies' Low Income Forgiveness Tool, with an eye toward assessing enrollment, qualifications for participation and the $600 down payment the utilities require for restarting service that was cut off for non-payment.

Development of a percentage of income payment plan that would limit energy costs to a fixed share of a household's income. That limit in other states is based on limiting energy burden.

"This was a this was an off year, but still an increase another increase," Content said of the small rate increase and narrow scope of We Energies' 2024 rate proposal.

"But, I think overall it's good to see that the PSC is continuing to emphasize affordability and the affordability challenges that customers are experiencing. It puts the utilities on notice that they needed to be diligent and justify every dollar of the customers' money that they're looking to spend."