PSC Error Hides Global Warming Bill Rate Increases

When the Public Service Commission put out a study showing that forcing utilities to spend an unnecessary $15 billion would save money, we were skeptical (see our previous posts).

Now, the PSC analysis has been analyzed and a major error has been found.

In a memo to Senate Clean Energy Jobs Committee Co-Chairman Jeff Plale, Steve Baas at the Metropolitan Milwaukee Association of Commerce explains the problem.

“…I believe the Commission has made a serious methodological error that distorts the actual cost impact of the bill and would like to bring it to your attention.”

Baas goes on to explain:

“But taking this Table 4 in isolation ignores the fact that prices are driven up in a reduced sales scenario so long as fixed costs are recovered in part by volumetric rates.”

What does this mean?  The PSC failed to consider that, even if folks use less energy through the conservation goals in the bill, $15 billion in construction will still have to be paid for.  Under the bill, lower use means higher rates to pay the higher costs of the bill.

Bottom Line:

As you can see, the results, using PSC’s own study numbers, indicate that the CEJA Sub proposal would increase electric rates between 6.4% and 12.5% above the status quo, depending on the assumption made for CO2 regulation costs. 

Even more likely are the increases Minnesota and Iowa are facing because they adopted a similar law:

In addition, we are concerned that even these estimates, derived from PSC’s own data points to 6.4% to 12.5% rate hike, still underestimates what we can expect based on real impacts in other states. For example, Minnesota and Iowa both adopted 25% by 2025 renewable mandates and now electric customers are facing rate increases of 14% and 20% respectively, with future hikes inevitable.

This is what WUI has been concerned about throughout this process.  It is easy for the state to mandate more spending and equally easy for them to “forget” that the bill must be paid.

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