We Energies Rate-Freeze Plan Wins Regulatory Approval

We Energies and Wisconsin Public Service Corp. won final state regulatory approval for a proposal to freeze business and residential rates for two years in what the company calls its response to complaints from industrial customers that electric rates in Wisconsin are too high.

The public utility companies owned by WEC Energy Group Inc. filed a proposed settlement in April to avoid the cost and effort of a full review by the Public Service Commission of Wisconsin.  At the time, the companies said 21 industrial customers signed statements backing the rate proposal.

The rate freeze adds two years to an existing two-year flatrate period that runs through 2017. The settlement also makes permanent cheaper wholesale rates that large industrial customers pay for expanded use of power from We Energies. The Public Service Commission has approved a draft order approving the company proposal for 2018 and 2019. The commission in August had voted to support the plan from the WEC Energy companies.

The PSC draft order determined that freezing We Energies base rates through 2019 was reasonable and in the public interest. The order also states that it’s reasonable to authorize We Energies to
extend and expand the market-based pricing for electric service at large commercial and industrial customers.

A WEC Energy spokeswoman said company executives are pleased with the commission’s action.

PSCW APPROVES RATE FREEZE FOR WE ENERGIES, WPS CUSTOMERS

The Wisconsin Public Service Commission has approved a two-year rate freeze for We
Energies’ and Wisconsin Public
Service’s electric and natural gas customers. The rate
freeze was part of a settlement proposed by WEC Energy Group,
the utilities’ parent
company, and supported by 24 of its largest customers. The two-year rate freeze means
that We
Energies’ electric rates — excluding fuel costs, which fluctuate — will remain
unchanged for four years. Six years also
will have passed since the utility’s last significant
increase in electric rates. In accepting the proposed settlement, the
commissioners made
clear that the commission will need to address several issues involving deferred costs that
have not
been included in We Energies rates. Those costs were projected to reach almost
$500 million by the end of the year.

Legislative and Energy Policy Update by James Buchen, WUI Executive Director

James Buchen, WUI Executive Director

The Wisconsin Legislature is
moving at a frenzied pace to
wrap up the 2015-16 session.
They were originally scheduled
to adjourn in April but the
leadership has indicated they
plan to take final action on
pending bills by the end of
February.  As a result things
are moving quickly by
legislative standards with as
many as a dozen hearings a
day on 40 or more bills.

 

There has been relatively little by way of energy policy
discussed in the Capitol this session. The utilities have
pursued a number of minor policy changes such as
legislation that would allow utility vehicles to exceed
seasonal weight limits on highways when responding to
a power outage and a bill that would extend utility aid
payments to counties and municipalities for 5 years, after
a property tax exempt generating facility is shut down.
There was little opposition to these measures and they
passed both houses and were signed into law by the
Governor.

One issue that has received more attention this session
is a bill that would repeal the virtual moratorium on the
construction of nuclear power plants in Wisconsin. With
concerns over global warming and carbon dioxide emissions
from coal fired power plants growing, there is renewed
interest in nuclear power as a zero emission option.  While
no company has proposed building a nuclear facility in
Wisconsin, passage of this bill would eliminate one legal
hurdle, if such a proposal emerged in the future. The bill
passed the State Assembly in January and is awaiting a
vote in the State Senate.  Perhaps the biggest energy policy
issues facing Wisconsin, as well as the rest of the country,
is implementation of the Federal Clean Power Plan, which
requires Wisconsin utilities to reduce carbon dioxide
emissions by 41 percent by the year 2030. Carbon dioxide
is a natural by-product of burning fossil fuels.  Utility CO2
emissions in 2012 amounted to 1996 lbs. per megawatt
hour of power generation.  As a result, achieving reductions
of this magnitude will be a daunting task.

Under the federal regulation the specific plans on how to
achieve reductions of this magnitude is left to the states.
Wisconsin utilities are looking to the Department of Natural
Resources to develop a plan so they can begin their planning
process to achieve compliance by the various deadlines in
the federal rule. The rule has triggered lawsuits from the
various states and could be affected by the outcome of the
Presidential election. This promises to remain a contentious
energy policy issue in the years ahead.

SETTLEMENT REACHED…

IN ALLIANT ENERGY’S RIVERSIDE ENERGY CENTER CASE

Alliant Energy’s plans to build a combined cycle natural gas-fueled generating facility near Beloit, WI, took a major
step forward as the company reached settlement with two key intervenors in the case, We Energies and Wisconsin
Public Service Corporation. The agreement creates mutual opportunities for the parties to invest in joint-ownership
generation projects and contemplates a joint-development agreement for renewable resources among other items.
Alliant Energy has filed the agreement on the Public Service Commission of Wisconsin’s (PSCW) website in docket no.
6680-CE-176.

“We’ve been able to work cooperatively with our neighboring utilities to find a solution that makes sense for energy
customers across Wisconsin,” said Patricia Kampling, Alliant Energy Chairman, President and CEO. “Along with
the modernized Riverside Energy Center, we believe this agreement will help control energy costs for Wisconsin
customers for years to come.”

Alliant Energy filed for regulatory approval of the proposed 650 megawatt natural gas-fueled plant with the PSCW in
May 2015. Technical hearings before the PSCW began December 21, 2015.

Wisconsin Public Service Files to add Electric Generator at Fox Energy Center

Adding a generating unit to the Fox Energy Center Site is the best alternative to reaching the needed capacity in the 2019 timeframe. Late last year, Wisconsin Public Service, a subsidiary of Integrys Energy Group, announced a need for an additional 400-500 megawatts (MW) of electric generating capacity by 2019. Among the options it considered were to purchase power from other energy suppliers, buy an existing or new generating facility, or add another natural gas-fueled generator to the site of the Fox Energy Center near Wrightstown, Wisconsin. After nearly a year of review and analysis, it has been determined that adding a generator to Fox Energy Center is the best option for customers. It expects to file an application with the Public Service Commission of Wisconsin (PSCW) in January 2015.

The company will propose a new 400-MW combined-cycle natural gas turbine. “The industry is moving toward the use of highly efficient combined-cycle generators,” said WPS Vice President – Energy Supply, Paul Spicer. “Fox Energy Center already is home to two combined-cycle units. We looked at many options, and adding a generator to Fox is a good fit for our company and customers.”

With the addition of the new unit, the Fox Energy Center will be capable of churning out about 1,000 MW of electricity.
The benefits of building at the Fox Energy Center include:
• Access to natural gas, cooling water and electric
transmission facilities already in place at the site.
• Operational efficiencies with the ability to complement
the existing plant staff with just a few new full-time
employees.
• A location that will improve system reliability. The electric
grid in Wisconsin is losing, or has lost, generation
facilities in nearby locations of Kewaunee, Green Bay,
Wausau and Sheboygan.
• Owning the generation instead of buying provides much
greater opportunity to control costs and reduces risk in
the long-term.

The approval process involves months of PSCW study and review, as well as technical and public hearings at which members of the public will have an opportunity to weigh in on their opinion of the project. Additional information on the project schedule as well as the estimated project cost will be included in the company’s filing with the PSCW.

Construction would likely begin late in the spring of 2016. During construction, about 400 workers will be needed at its peak. The new generator would also lead to approximately ten new full-time positions at the Fox Energy Center.

Spicer said that WPS has several older coal-fired generating units which may face retirement because of increasingly stringent environmental regulations. The company also expects some moderate growth as the economy continues to inch upward.

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