Legislative Update

The 2017-18 Legislature convened its first regular session in January of this year.
In February, Governor Walker introduced his Biennial Budget proposal (AB 64/SB 30)
which governs the state’s taxing and spending for the next two years beginning in July
2017. The Legislature’s Joint Finance Committee has begun its review of the proposal
and the Budget is expected to occupy most of the Legislature’s time and attention until
the bill finally passes in late June.

Of significant interest to utility shareholders, legislation has been introduced by Senator
Stroebel and Representative Ott (SB 115) that will allow the Wisconsin Public Service
Commission (PSC) to retroactively modify or terminate, existing and previously approved,
leased generation contracts. Currently, under such contracts, public utilities are able to
lease electrical generating facilities from their affiliates. This type of financing arrangement
has been used in Wisconsin to facilitate the investment of billions of dollars in new generation
facilities in recent years.

Under current law, the PSC may modify or terminate such contracts only as specified in the
contract itself, or the original order approving the original contract. Under the provisions of
SB115, the Public Service Commission could unilaterally invalidate or modify these contracts
which could significantly impact a utilities rate of return and dividend payout.

The sponsors of the bill believe that modifying these existing contracts will force a
reduction in electric rates. However, the current rates are necessary to generate a fair rate
of return for utility shareholders based on the recent investments Wisconsin utilities have
made in new electric generation.

If this proposal makes investment in Wisconsin utility stock less attractive for many small
investors, it will become more difficult for Wisconsin utilities to raise the necessary capital
to maintain and upgrade our electrical system. In the long run, this hurts consumers
who will have to pay even higher rates to finance the additional borrowing and internally
generated capital needed to replace their equity investment.

Investors seeking stability and reliability have the choice of investing in a wide range
of electric utilities across the country. To the extent that Wisconsin utilities become a
less attractive investment option, shareholders can go elsewhere, while consumers in
Wisconsin are simply left with higher electric rates.

Wisconsin utilities, WUI and many key legislative leaders have already expressed concern
over this bill. You can add your voice of opposition by attending WUI’s Legislative Day in
Madison on May 24, 2017.

ROBERTS APPOINTED PSC COMMISSIONER

Gov. Scott Walker recently announced that Department of Financial Institutions (DFI) Secretary Lon Roberts will replace current Public Service Commissioner Phil Montgomery whose term on PSC ends next month. Montgomery had served 12 years in the Wisconsin Assembly before his six-year term on PSC.  Roberts, Montgomery’s replacement, was a partner and president at a law firm in Wausau and served as chair of the State of Wisconsin Investment Board before becoming DFI secretary in February 2016.

ENERGY EFFICIENCY STUDY

The Wisconsin Public Service Commission recently commissioned a study of Wisconsin’s  energy efficiency efforts to date and the potential for additional consumption reductions that could be achieved in the future by implementing additional efficiency measures. The study will provide estimates of energy efficiency potential through 2030. They intend to collect data in an effort to evaluate the success of current efforts, estimate the impact of building energy codes, and estimate the energy savings potential for a comprehensive list of potential programs and measures. The results will be used to determine the appropriate level of state investment in energy efficiency programs in the future as well as provide guidance on program design.

Lower Fuel Costs Could Offset We Energies Price Increase

Lower natural gas and coal costs could offset most of a small price hike that is set to hit electricity bills of We Energies customers next year. The utility has filed an application with the Public Service Commission to reduce by more than $17 million the amount it wants to spend for fuel burned in its power plants.
Lower natural gas prices are expected compared with this year, and lower costs to deliver coal by train to Wisconsin are now expected. In addition, the utility is forecasting $8 million in savings because more of the coal burned at its new power plant in Oak Creek will be less-costly coal mined in Wyoming, he said.
The plant was designed to burn coal mined in the eastern United States, but the utility is testing the ability of the plant to burn more western coal. Those reductions offset several increases in costs that the utility is expecting, including $4 million in higher costs to buy power from the Point Beach nuclear plant and higher costs of chemicals used in air pollution control equipment at coal-fired power plants. The fuel-cost savings would amount to 51 cents a month for a typical customer now paying $101.72 a month, according to We Energies.

PSCW APPROVES WE ENERGIES’ ACQUISITION OF INTEGRYS

The Wisconsin Public Service Commission has issued written
approval of the acquisition of Integrys Energy Group of Chicago
by Wisconsin Energy of Milwaukee. The $9.1 billion deal was
previously approved by federal and Michigan regulators and
shareholders of each company. It requires approval by regulators
in Illinois and Minnesota. Integrys owns natural gas distribution
companies in each of those states.

« Older Entries