September 3, 2008

Utility, Group Strike Deal Wisconsin Public Service Corp. To Spend More on Efficiency


Wisconsin Public Service Corp. will boost spending on energy efficiency and alter how it collects rates to increase conservation under an agreement the Green Bay utility reached with the Citizens Utility Board.

The utility also pledged to support energy efficiency policy proposals recently forwarded to Gov. Jim Doyle by the state's global warming task force, such as revisions to the state building code and energy efficiency standards for consumer appliances.

The utility has sought to change the way it earns a profit in order to improve the predictability of its sales from year to year, said Jim Schott, vice president of regulatory affairs. But the Citizens Utility Board, a consumer advocacy group, had opposed the change until reaching the deal with the utility that would boost spending on energy efficiency.

"Right now, the more we sell, the more money we make, and the less we sell, the less money we make," Schott said. "We have an incentive to encourage our customers to use more energy, and that's not where we want to see our customers go. With high energy costs and concerns about climate change, we want to be encouraging our customers to be using less energy."

The Citizens Utility Board would like to see similar deals reached by We Energies of Milwaukee and other state utilities, said Charlie Higley, the group's executive director.

The package includes a proposal to reduce the customer charge, now $8.40 a month, by nearly $3 a month, for the average residential customer. Much of that would be offset by an increase in rates that are tied to how much energy homeowners use but that will encourage conservation, Higley said.

"High customer charges really do annoy people," Higley said. "If they use little energy and they see a high customer charge, they say, 'Why am I being billed more even though my usage didn't change?' "

In the past, the Citizens Utility Board and other customer groups have opposed plans to break the link between sales and profits because they were concerned it would lead to consistently higher rates without much benefit for customers.

But decoupling efforts are gaining traction around the country, as utilities and regulators experiment with policy proposals designed to encourage customers to conserve energy.

Energy efficiency is considered one of the least expensive and most technologically advanced ways of reducing emissions linked to global warming. Other strategies to bring down emissions -- such as building new nuclear reactors or advanced coal-fired power plants that would capture greenhouse gases and store them underground -- are costly and face technological or political hurdles before they can be implemented.

The deal between the utility and the advocacy group must be ratified by state regulators as they consider a proposal to raise electric rates for the Green Bay utility's customers in 2009 and 2010. The utility has also agreed to voluntarily boost its spending on energy efficiency programs administered through the state Focus on Energy program.

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