Midwestern consumers could see lower electricity rates as a result of a federal ruling that transmission companies were reaping excessive profits, but the decision is unlikely to slow construction of transmission lines through the Coulee region.
The ruling, issued last week by an administrative law judge, recommends lowering the federally regulated tariff for two dozen transmission companies by more than 2 percentage points and ordered the utilities to refund excess revenues collected between November 2013 and February.
If adopted by the Federal Energy Regulatory Commission, it could send hundreds of millions of dollars back to utilities in seven states, including Wisconsin, Minnesota and Iowa, ultimately pushing down the cost of electricity.
“That’s a good thing for consumers,” said Kurt Runzler, acting executive director of the Wisconsin Citizens Utility Board, one of multiple consumer advocacy groups to join the complaint.
A complaint filed by large industrial consumers and joined by consumer advocate groups in Minnesota, Wisconsin, Iowa, Michigan, Illinois, Indiana and Missouri sought to lower the approved return on equity for transmission companies working with the Midcontinent Independent System Operator, a nonprofit organization providing a wholesale energy market.
With one exception, the MISO transmission companies were allowed to earn a 12.38 percent profit. American Transmission Co., which is preparing to build a $580 million line between Holmen and Madison, was held to 12.2 percent.
The complaint, filed in 2013, sought to lower that rate to 9.15 percent. The decision authorized a rate of 10.32 percent.
Another complaint before the commission seeks to lower the return on equity going forward.
Jennifer Easler, an attorney with the Iowa Office of Consumer Advocate, said the ruling on base rates could have a value of $20 billion, although some of the transmission companies could be granted bonus profit allowances that would reduce the amount of the rebate.
It’s not clear exactly how much money will be returned in each state or when it would be returned. State regulators consider expenses such as transmission fees and fuel costs when setting electricity rates, so any reduction would likely be factored into future cases.
“I don’t think this decision will mean that rates determined in December will change,” said James Woywood, staff attorney for the CUB.
As electricity is increasingly bought and sold across large geographical areas, utilities pay transmission companies a fee to move electrons across high-voltage power wires such as the segment of a line known as Capx2020 that was completed this summer between Alma and Holmen to deliver power from western Minnesota and the Dakotas.
Owned by Xcel Energy and other utilities, CapX will eventually connect with another high-voltage line known as Badger-Coulee, which will carry the electricity from Holmen to the Madison area.
The ruling is expected to be neutral for customers of Dairyland Power Cooperative, because the La Crosse-based utility both owns transmission lines and pays to use other company’s lines, spokeswoman Katie Thomson said.
One of the companies affected by the decision is Waukesha-based American Transmission Co., the primary developer of Badger-Coulee. Spokeswoman Anne Spaltholz said ATC and other companies have not decided whether they will appeal the judge’s ruling but did not anticipate the decision would affect construction of the $580 million project, which is scheduled to begin this spring.
Runzler said the ruling is unlikely to discourage future transmission projects because utilities are still allowed to reap more than 10 percent return on equity.
Badger-Coulee also faces a legal challenge from the Town of Holland, which claims the line will not save ratepayers money and that the Public Service Commission erred in approving a second line through the town, rather than putting the wires on the same poles as CapX2020.
A La Crosse County judge has yet to rule on whether the case can proceed.