Try 1 month for 99¢

Loren Krueger has had energy audits. He’s added insulation to his attic and basement, purchased high-efficiency appliances and gotten rid of old incandescent light bulbs.

He and his wife turn off the lights as soon as they leave a room.

“We’re constantly watching the cost, and we do notice a difference in the price,” Krueger said. “It has reduced our energy bill. At least 10 percent. That means a great deal to us.”

More recently they added aerators and new shower heads to limit their hot water use.

So the 77-year-old retired Trane worker was not happy when Xcel Energy proposed raising the flat monthly fee on his electricity bill from $8 to $18.

“It’s counterproductive,” Krueger said. “They’re telling us at one point conserve energy. And we know that will keep our cost down. And now they want to raise the rate. I think that’s very unfortunate.”

Krueger is among the thousands of consumers who have lodged complaints about a fundamental shift in the way Wisconsin utilities are charging for electricity.

But despite a coordinated grassroots campaign, consumer and clean energy advocates expect regulators to approve Xcel’s request to more than double its fixed charge, requiring those who use the least energy to pay more to keep the lights on.

Decisions in three similar rate cases last year have led industry watchers to conclude that Wisconsin’s Public Service Commission – the three-person board that sets power rates – has embraced this policy favored by utilities but so far rejected .

“Over the past few years we’ve seen an increasing trend in utilities requesting … these higher fixed fees,” said Brad Klein, senior attorney for the Environmental Law and Policy Center in Chicago. “Wisconsin is the only state where these extreme increases have gotten any traction.”

A question of fairness

In requesting an overall 3.9 percent revenue increase, Xcel is proposing to actually lower residential electric rates by 0.7 cents per kilowatt hour and in return raise the fixed charge for about 225,000 residential, farm and small commercial accounts in western Wisconsin.

That would mean every customer would pay $216 a year even before turning on the lights.

For the average household – using about 750 kwh a month – that would mean about $5 more each month, or an overall increase of 4.6 percent. Those using more energy would see smaller increases. But a customer using just 200 kwh would pay an extra $8.60 – a 26 percent hike.

Xcel rate increase: Four scenarios

Xcel Energy is asking regulators to approve a $10 increase to the basic monthly charge applied to residential customers in Wisconsin. Xcel would reduce the price of electricity by an average of 0.7 cents per kilowatt hour. That translates to a bigger increase for customers who use less energy. 

Use Current bill New bill Increase
200 kwh/month $32.72 $41.30 26 percent
400 kwh/month $57.44 $64.48 12 percent
750 kwh/month $100.70 $105.38 4.6 percent
1,000 kwh/month $131.60 $134.50 2.2 percent

The PSC, scheduled to hold a public hearing Thursday on Xcel’s rate case, last year granted similar increases to three other investor-owned utilities, including the Wisconsin Public Service Corp., which is asking to further boost its customer charge next year.

Utilities argue it’s a matter of fairness: customers who only use a little electricity should still have to pay to have it when they need it.

“These are generally about trying to make sure rates are aligned with the true cost of providing service to customers. … without having one class of customers subsidize another,” said Bill Skewes, executive director of the Wisconsin Utilities Association, which represents the state’s investor-owned utilities.

But opponents say it’s anything but fair to customers who use the least electricity and can least afford it.

“People should be able to manage their bills and save money by using less, not by wasting more,” said Russell Wallace, president of the Citizens Utility Board, a nonprofit organization that advocates for “reliable and affordable” utility service on behalf of Wisconsin consumers.

The change has even attracted the attention of the AARP, which represents 825,000 members and more than 2 million Wisconsin residents over age 50.

“This mandatory charge has a disproportionate effect on many seniors and others who are struggling to have more control over their monthly utility bills,” said state director Sam Wilson.

Other groups argue it negates efforts consumers have made to conserve – whether by limiting their use or purchasing energy efficient appliances.

“The rate structure really thwarts innovation and conservation,” Klein said. “It sets the state back in terms of attracting new innovations.”

“That’s not the right incentive (message) to send going forward,” said Tyler Hubner, executive director of RENEW Wisconsin, a nonprofit organization that promotes clean energy.

Disruptive forces

The strategy is a response to stagnant electricity sales and what the Edison Electric Institute called “disruptive forces” – such as energy efficiency and technology making it increasingly easy for consumers to generate their own electricity.

“The threat to the centralized utility service model is likely to come from new technologies or customer behavioral changes that reduce load,” the industry group wrote in a 2013 policy paper that advocated the rate shift.

While they are becoming more affordable and popular, rooftop solar panels are hardly the norm. Xcel has just 175 so-called “distributed generation” Wisconsin customers – less than 0.08 percent – putting power into the grid.

Still, electricity sales have stagnated.

Over the past decade, total electricity sales grew by only about 1 percent, according to data from the U.S. Energy Information Administration. Sales in Wisconsin actually declined.

Regardless of sales, utilities have to maintain the lines, poles and meters required to deliver power.

“We’re required by law to have reliable power available to anyone who wants to use it,” said Don Reck, Xcel’s regional vice president of rates and regulatory affairs. “All that costs the same whether you use it once a day … or once a year.”

Opponents counter that many industries have infrastructure.

“In a competitive market a company can never get away with this,” Hubner said. “The oil and gas industries have huge fixed costs … and yet they sell their product one gallon at a time. Low use customers aren’t charged just for showing up at the gas station.”

Out of step?

In the past two years, at least 35 investor-owned utilities in 18 states have proposed flat fee increases ranging from 10 cents to $16.

Three states rejected increases across the board, while 15 states authorized rate increases of $2.15 on average. Wisconsin approved three increases, with the average amount at more than $8.

Other states that approved fixed rate increases gave utilities about 35 percent, on average, of what they requested. Wisconsin regulators agreed to more than 77 percent.

“There’s something going on in Wisconsin that’s very different than anywhere in the country,” Klein said. “Other customers are not being asked to pay these extremely high fixed charges.”

In Minnesota, Xcel requested only a $1.25 increase to the $8 fee - state regulators turned them down - which has led to cries of price gouging by their critics, who point out that power flows freely between the states.

Reck notes that Xcel subsidiaries NSP Minnesota and NSP Wisconsin are separate corporations with different costs. Because three quarters of Minnesota customers live in the Twin Cities, Xcel has about twice as many Minnesota customers per mile of power line as it does in Wisconsin.

But Reck also said the company takes its cues from regulators, who have signaled support for a different rate structure.

Citing the pending case, PSC chairwoman Ellen Nowak declined to be interviewed, but she has embraced the industry’s arguments in public speeches and in the commission’s written decisions on other cases, suggesting those who use less energy – whether by limiting consumption or generating their own – aren’t paying their fair share for the infrastructure.

She argues that as long as they are connected to the grid, these customers represent potential demand. Therefore they should have to pay for the privilege of having power when they need it.

“(L)ow use is not the same as low demand, and therefore low-use customers do not necessarily contribute to a lower cost utility system,” Nowak wrote in one decision. “(I)t is unfair to allow continued subsidization of low use customers through a rate structure consisting of misleadingly low fixed charges and high variable charges.”

Klein suggests the PSC’s mission has been flipped.

“Something has gone off track,” Klein said. “This regulation is being applied to protect utilities from their customers.”

Those customers have taken notice.

As of Friday, the PSC had received more than 350 comments on the rate request. Xcel’s last regular rate hike request generated six.

Virtually every comment opposed the hike.

Some comments focus on the impact the rates would have on renewable energy development; others simply protest the idea of little guys paying more.

“This is a blatant attempt by Xcel energy to line their pockets at the expense of the middle/lower class,” writes one Onalaska resident. “We don't use a lot of electricity, and there's a reason for it. We simply cannot afford it.”

Innovative solutions

Clean energy advocates say there are other more effective ways for utilities to recoup costs.

Some advocate time of use billing, where prices vary depending on demand. That means consumers would pay more on summer afternoons, when air conditioners are running overtime and wholesale prices spike.

On the flip side, they could save more by turning up the thermostat during peak times and running the dryer at night. Those with solar panels on their roofs would be rewarded for adding power to the grid when it's most needed.

Another option is the minimum monthly bill, where the base charge is essentially a credit toward electricity used.

Xcel uses time of use pricing for some customer classes, but Reck said it doesn’t address the infrastructure costs. Reck said that is feasible but creates more administrative challenges.

“It’s two different ways to accomplish the same thing,” Reck said. “One is more complicated.”

Klein said utilities – with the help of the PSC – are trying to lock in a change that will protect their revenue stream by discouraging change. In the process they are creating divisions that will prevent better solutions.

“There’s no emergency in Wisconsin requiring this overhaul,” Klein said. “We’re not seeing the need for it. There is a lot of time for utilities and their customers and regulators to sit down and come up with innovative solutions.”

Subscribe to Daily Headlines

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.
0
0
0
0
0

Xcel rate increase

Wisconsin regulators approved a $6 increase to the basic monthly charge applied to residential customers in Wisconsin. Xcel will reduce the price of electricity by an average of 0.7 cents per kilowatt hour. That translates to a bigger increase for customers who use less energy. 

Use Current bill New bill Change
200 kwh/month $32.10 $36.72 14 percent
750 kwh/month $98.38 $99.20 0.8 percent
1,000 kwh/month $128.50 $127.60 -0.9 percent

(31) comments

AirForce Retired

Appointed by Governor Walker. Appointed byGovernor Walker Appointed by Governor Walker What part of corruption don't you people understand. And yet some will defend him.

PaulK

Interestingly enough, the higher monthly charges provide an even greater incentive to install alternative energy systems. The strategy may be penny wise but pound foolish.

Buggs Raplin

Shame, shame on all of you for wasting your time on this debate when Lamar Odom is having his troubles, which are more important than anything. At least that's what the media coverage tells me.

teddyj

Since when have government ever come up with a innovative solution. The government has too much money to come up with innovative solutions so they don't. That's the problem. Trump will solve it all. HAHAHA

teddyj

I have no problem moving to Minnesota and giving them my tax money going forward.

Protect This Planet

RePower Madison was formed when MGE proposed increasing mandatory fees to $69/month for electric customers by 2017. Might be time for a RePower La Crosse?

http://www.repowermadison.org

teddyj

Once they get $15 per month in fixed costs I'm sure the next move will be to increase the fixed costs to $25. Now that is progress.

teddyj

But I only need 1/2 of 1 electron this month. That will be $20 dollars.

superman

Exel's worst nightmare - Tesla's Powerwall:

http://www.teslamotors.com/powerwall

teddyj

There is going to be a fixed cost to dying now. If you don't have it you won't be able to go to heaven. Walker has determined you will need to give Wisconsin $280 to die since it is GOD's COUNTRY.

teddyj

Next up: Charging more for people to die in Wisconsin!

teddyj

And when the charge is passed and my power goes out for 2 minutes during the month I am not paying my fixed charge since I didn't have the power I was promised.

superman

Interesting story about Ellen Nowak from PSC:

http://cleantechnica.com/2014/11/28/commissioner-ellen-nowak-advise-wecs-ceo/

teddyj

Amazing coincidence. All stooges on this panel are appointed by Scotty "poop for brains" WALKER.

teddyj

You should understand this already happened at the post office. NO ONE IS USING MAIL ANYMORE. Well we will just raise prices. WOW! That should really solve nothing.

Maybe the reason people want off the grid is due to this bull caca.

teddyj

So an industry gets a deal and the FIXED INCOME grannies don't get to eat in the winter. DO YOU UNDERSTAND THERE ISN'T another $5 dollars for her?

LesTrafik

I would much rather have those increases go toward innovative renewable solutions. But renewables matter less when you have a Walker appointed staff with a monopoly like Xcel out to restructure fees & renewable energy rewards (in advance?) to Xcel’s advantage. They’ve got us from both ends.

Basically looks like Walker’s appoint staff proposed a disincentive for reduced energy & renewable use, and generally a disproportionate fee (tax) increase to those who can least afford it.

Machiavelli

Re: "But opponents say it’s anything but fair to customers who use the least electricity and can least afford it."

'“People should be able to manage their bills and save money by using less, not by wasting more,” said Russell Wallace, president of the Citizens Utility Board, a nonprofit organization that advocates for “reliable and affordable” utility service on behalf of Wisconsin consumers."'

Correct. But low-income seniors and the working poor don't complain. Plus, the Republicans like to give those most vulnerable a good thrashing...makes them feel superior. Nasty bullying behavior from Xcel and these mean PSC appointees too.

“No, we aren't civilized, even in our business suits and high heels. People are as mean as ever, and as predictable. Underneath it all, we are not so different from what lurks in the wild, perhaps we're worse.”
― Donna Lynn Hope

superman

Complain all you want, but it's electricity that keeps society humming along.Take away electricity, and we have 3, maybe 6 days top, before society collapses.

If you don't like the proposed billing structure, then do something about it. Put in a bunch of solar panels, etc. There are alternatives, and clearly those alternatives threaten Exel Energy.

It's up to you to be responsible for yourself and your family. So instead of complaining, do something about it.

PhysicsIsFun

This decision flies in the face of all reasonable public policy with regards to energy use. It is no surprise it has come from the Republican Party. They long ago gave up rational thought in favor of self serving laws and political expediency.

oz

Look at the middle of the story: "electricity sales have stagnated".

Yet the power companies keep saying that they need to build massive and expensive new power lines to handle "anticipated increased demand."

Well, they've been "anticipating" it for years, and it hasn't materialized. This is little more than a money-grab.

Also, notice every member of the PSC is a Walker appointee. Repugnantans won't raise taxes on rich people, but they're totally happy to raise electric bills on poor people.

Jim Rosenberg

There is no question that fixed costs are a big part of providing utility service, but the same is true of other infrastructure investments. For example, it would be easy to justify having license plate fees raised to many hundreds dollars annually in order to reduce the per gallon taxes for gasoline and diesel fuel by using the very same economic argument. Would people go for that -- or do they think it is better for those who use the system the most to pay more in proportion to their use? Energy conservation is a good policy goal and rate structures should adequately reflect that priority, while also accommodating the needs of customers and citizens, on behalf of whom rate structures should be designed, while also providing a fair return to those who put up the money to provide necessary facilities.

allcav

You trolls must get up really early to post your stupid, liberal comments. Do you even read and consider the subject? I doubt it.

jharrimjr

We get up early to post, unlike apparently you, who waits til s/he's sloshed at bar time to post an empty comment. And your sage thoughts on the article, allcave?

Jobaba

You want to call sending electricity over poles and wires infrastructure? Buried lines in newer parts of cities is the norm.

So we pay more to use obsolete technology?

Many states have a fund contributed to by power companies to bury old antiquated lines - bet we don't.

But we all know that 1000 year storm will never come, don't we?

jharrimjr

Typical results from the Grand Oppression Party of cost-shifting. First, they shift taxes from the State to the Local level, causing fewer people to pay more (compared to more people paying less). Now, with their Reverse Robbin Hood PSC appointees, they shift costs from Large users of power (their friends Big Business) to the little people. These fixed-cost raises are BS. The same for natural gas. The infrastructure is already there. It's upkeep can be calculated into the use costs when from time to time maintenance and upgrades are needed.

We need to Nationalize the entire energy sector in this Country and dissolve these investor-owned outfits who need to constantly produce dividends and profit for their owners.

Melowese Richardson

"First, they shift taxes from the State to the Local level, causing fewer people to pay more (compared to more people paying less)."

===========

harrassem: Of all the things you've ever said that is by far the dumbest. And that is saying a substantial bit.

jharrimjr

Ah, Smello'sleazy, you are either really ignorant of the facts or simply another Goebels-esque RepubliClown propagandist. A little history lesson: when King Tummy Slush Thompson was governor, he shifted a sizeable amount of business tax the individual income tax. As I predicted, his tax cuts SHIFTED taxes in WI, not cut them. Now, with Darth Wanker, State taxes are "cut" by not really because local school districts and municipalities have to make up the difference. A tax shift. Further, wealthier individuals and areas of the State got tired of paying in MORE tax money (because they had more) anddidn't want to see that money go to poorer areas. Of course that is the power of Greed and the power of ALEC.

wakeup

This is a good article, but more space should be given to the root of the problem- the Koch/ALEC overlords of the WI Republican party (and their lackey PSC) who have been shopping these anti solar policies all over the country. This is important context. La Crosse should disconnect from Xcel and set up a public utility. Other communities have done.

lookout

Politicians get bought off by energy companies and voters wallets gets smaller every time..

midcentury

Don't buy power from them- put in a natural gas gen set and solar power panels
and send them a little letter asking them how they like that ? $180 per year - well just look at who is on that board- Wonder how much influence they really had with the board???
Something is happening in Wisconsin that's different It's Scott Walker's open for business of messing up the state- and the taxpayers and energy buyers-monopoly-this is to protect the consumer's Well we can see how that works in the GOP mind .

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.

Thanks for reading. Subscribe or log in to continue.