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We Energies' Electricity Price Request is Its 4th Since October

Posted on: Saturday, 2 July 2005, 15:00 CDT

We Energies customers, whose electric bills have jumped by more than $5 a month since March, would see another $5 increase in 2006 under a request filed Friday.

The proposed rate increase comes amid an outcry from energy customer groups about price boosts that utilities have received in recent years even before utilities began to build new power plants to help quench the state's growing thirst for electricity.

The request came three days after We Energies received the go- ahead from the Wisconsin Supreme Court to build a $2.2 billion coal- fired power plant project in Oak Creek. Half of the money raised by the rate increase would be used to pay for Oak Creek and other power plant projects.

Milwaukee-based We Energies has received $174 million in electric rate increases this year and is seeking another $143.5 million in the application filed Friday. The typical residential customer now pays about $74 a month for electricity, and, if approved, the rate boost would add $5 to that amount.

Friday's request follows a succession of recent rate increases granted to or sought by We Energies, which provides electricity, natural gas and steam to about 1.1 million customers in southeastern Wisconsin and in the Fox River Valley and Michigan's Upper Peninsula.

-- In March, the utility was granted a 5% increase in electric rates, or more than $3 for a typical residential customer, to pass on higher fuel costs to ratepayers.

-- In May, We Energies received a 2% increase in electric rates, or nearly $2 a month for a typical resident, to pay for new power plants.

-- A separate electric increase, approved in October, would add $1.49 to a typical resident's bill and pay for environmental upgrades at older We Energies power plants. That increase has not yet hit customers' bills.

-- In June, We Energies filed a request to raise natural gas prices by 4.8% to 6.5% next year.

Paying for power plants

The company said it would continue a freeze in operating costs that has remained in place for the past five years, but said the latest increase is needed for projects to improve reliability including $70 million for new power plants and $67.5 million in power line-related costs charged to the company by Pewaukee-based American Transmission Co., said Roman Draba, We Energies vice president of regulatory affairs and policy.

The package also includes $6 million for renewable energy and efficiency initiatives, he said.

The increase is proposed to be in effect for two years, meaning the utility wouldn't seek any electric price increases until Jan. 1, 2008 except to pass on higher fuel costs or pay for a new wind- power project in Fond du Lac County, Draba said.

If the increase isn't reduced by the Public Service Commission, residential customers' bills would be up by more than $10 a month for a typical customer or 14% between January 2005 and January 2006. That includes the new request and increases that took effect in March and May.

"We've been expecting this to be the We Energies whopper rate case," said Charlie Higley, executive director of the Wisconsin Citizens' Utility Board, a utility customers group.

"Despite We Energies' claim that it's limiting its request for cost recovery, we're still being hit with Chicago-style rates at a time when families are struggling to make ends meet."

Utility claims restraint

Draba said the increase could have been much larger, because the utility had the option of recouping a series of costs that it was barred from collecting because of restrictions in place since Wisconsin Energy Corp.'s acquisition of Wisconsin Gas five years ago.

That includes roughly $180 million in power-line costs associated with the construction program of American Transmission Co., a transmission-only utility formed in 2001 by several state utilities.

In a departure from typical increases, the company is asking that state regulators set a range for the rate of return, or profit, that the utility can earn. The utility wants a 12.2% return, but said that if its return is 11.7% or less, it may seek another increase. If the return is 12.7% or higher, customers could see a credit on their bills.

Customer group advocates said they plan to fight to reduce both the size of the increase and the size of the rate of return sought by We Energies.

Wisconsin consumers pay more

An analysis by the state Public Service Commission this year found that Wisconsin utility customers are paying more than customers in surrounding states. The study said the typical We Energies customer's electric bill climbed by 24% to 31% since 1995, depending upon whether the customer was a residential or industrial user.

A federal Energy Information Administration analysis of bills found that Wisconsin's average prices are highest among seven nearby states, and ranked in the top 15 in the nation during the 12 months that ended in March.

We Energies says its rates are competitive nationally and in Wisconsin, ranking below three of the state's other four investor- owned utilities.

How it affects you

Under a We Energies price increase sought Friday, here's how customers' electric bills would change in 2006.

Residential: Increase of 6.8%, or $4.96, for a typical customer.

Commercial: Increase of 6.3%.

Industrial: Increase of 8.2%.

Copyright 2005, Journal Sentinel Inc. All rights reserved. (Note: This notice does not apply to those news items already copyrighted and received through wire services or other media.)

Source: Milwaukee Journal Sentinel

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