Last updated on August 27th, 2019 at 04:06 pm
A settlement between WEC Energy Group and two major customer groups would limit We Energies’ overall electric rate increase to 1.3% in 2020 with no additional rate increase in 2021.
The utility’s original request to the Public Service Commission of Wisconsin would have increased electric rates 2.9% in 2020 and another 2.9% in 2021.
Milwaukee-based WEC Energy Group first notified the PSC of the settlement with Citizens Utility Board of Wisconsin and the Wisconsin Industrial Energy Group on Friday. A securities filing Monday morning detailed many of the terms of the deal.
The agreement still needs approval by the Public Service Commission.
“The settlement is a positive step forward,” Brendan Conway, a WEC spokesman, said in an email. “A balanced approach to resolving the major issues in the various rate cases. We look forward to the PSCW’s review of the agreement.”
Todd Stuart, executive director of WIEG, also called the deal a balanced and reasonable compromise.
“The partial settlement also makes a step towards building better relationships with the stakeholder groups, providing more transparency and setting a roadmap to address the utility’s future generation resource mix,” Stuart said in an email.
The agreement includes a return on equity of 10% for Wisconsin Electric, down from the current 10.2% and the proposed 10.35%. The return on equity would be set at 10.2% for Wisconsin Gas and 10% for Wisconsin Public Service Corp. The parties also agreed to a common equity component of 52.5% for all three of the Wisconsin utilities.
All three utilities also agreed to maintain their currently authorized fixed charges through 2021 instead of seeking an increase and to support maintaining the current real-time pricing rates for large commercial and industrial customers.
The deal also seeks to address the remaining roughly $400 million in costs for the Pleasant Prairie Power Plant the utility shut down in 2018.
We Energies had sought to recover a 10% profit on roughly half of those costs, a move ratepayer group’s like CUB opposed given the plant was no longer producing electricity.
The agreement calls for We Energies to securitize $100 million of those costs through a form of bonding at an interest rate well below 10%.
“This is a big step for this utility to include securitization,” said Tom Content, executive director of the Citizens Utility Board.
Content said dealing with the stranded costs of older coal-powered plants is one of the more important issues as the utility works to shift toward more renewable energy sources.
“This settlement hopefully provides a framework for considering how to address other coal-fired power plants in the future,” Stuart said. “There needs to be a balance with the regulators and the ratepayers. As the generation mix is evolving, the economic benefits must flow back to the ratepayers now and over time.”
Content described the settlement as “a good series of wins for customers,” although some issues will remain to be contested with the PSC. He said a recently passed state law that encourages negotiations helped bring the deal together.
“We always had this process (in the past) where we would litigate and fight to the end,” he said, adding that while CUB had always represented residential and small business customers at the PSC, the group now has a seat at the negotiating table with the utilities.