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The We Energies Public Service Commission - Part 1

Updated: May 28

Wisconsin's Utility Watchdog is Failing Families

If you live in Wisconsin, chances are you've felt the sting of rising utility bills in recent years. But what you may not realize is that our state's system for regulating those utilities is fundamentally broken, leaving ratepayers unprotected from unfair rate hikes and cozy relationships between regulators and the companies they oversee.

- An estimated 60,000 We Energies customers in the Milwaukee area are behind on their bills, as the utility continues to raise rates year after year.

- The Public Service Commission (PSC), which is supposed to regulate utilities and protect consumers, has instead acted as a "revolving door" between industry and government. Many commissioners have close ties to the utilities they regulate.

- Wisconsin is falling behind neighboring states like Minnesota, Michigan and Illinois when it comes to clean energy investments and policies that could lower costs for ratepayers.

So how did we get here? And what can we learn from other states that are doing a better job standing up for utility customers?

The Watchdog That Didn't Bark

In most states, the Attorney General plays a key role intervening in utility rate cases to advocate for consumers. But in Wisconsin, the AG is largely sidelined.

Take the example of North Carolina. Attorney General Josh Stein has been a vocal critic of Duke Energy's frequent rate hikes and successfully pushed the utility to absorb more coal ash cleanup costs rather than passing them on to customers. His office estimates these efforts will save North Carolinians over $1 billion.

The WPSC has limited legal authority compared to utility commissions in some other states. For example, the WPSC cannot order a utility to use securitization to reduce coal plant closure costs, and the Wisconsin Attorney General is not empowered to legally intervene in WPSC cases on behalf of ratepayers. This constrains the WPSC's ability to protect consumers.

In contrast, Wisconsin's Attorney General is not empowered to intervene in PSC cases. This leaves advocacy to nonprofits like Walnut Way Conservation Corp and CUB, which have limited resources to provide advocacy for rate payer issues beyond the legal boundaries of the WPSC.

The Wisconsin Public Service Commission has no legal authority over We Energies to:

  • Make utilities use special loans to lower costs when closing coal plants. In Wisconsin, utilities can only use these loans for certain costs. The WPSC can't make utilities use the loans unless the utility asks first. Other states let their regulators use more tools to help customers save money when coal plants close.

  • Require utilities to make long-term plans for meeting electricity needs. The WPSC looks at most utility projects one at a time instead of making utilities plan for the future. States like Michigan and Minnesota make utilities submit long-term plans and get them approved. This makes the process more clear and helps states meet clean energy goals.

  • Set detailed technical standards for utilities. A study found the WPSC has stricter technical standards than 25 other states. This means the WPSC has less flexibility than other state regulators.

  • Keep a wide range of records. Most states require utilities to keep all kinds of records so regulators can check them. The WPSC only requires certain technical records to be kept, not a broad rule that all important records must be saved for regulators to review.

  • Stop regulators from going to work for utilities they regulated. Many WPSC officials later take jobs with the utilities they oversaw. States like Minnesota have stricter rules against this. Other states like Illinois have separate consumer advocates to balance out utility influence.

  • Allow different types of electricity rates, like basing bills on a percentage of income. Wisconsin has the highest electricity rates for businesses in the Midwest, so some are thinking about leaving. The WPSC is still studying new rate options, while neighboring states already offer more choices.

Revolving Door Regulators

Another issue is the cozy relationship between the PSC and the utilities it regulates. Critics call it a "revolving door" where commissioners and staff frequently move between industry and the agency.

Some recent examples:

  • - Ellen Nowak left her PSC post in 2023 to take an executive role at American Transmission Company, which she previously regulated.

  • - Former commissioner Mike Huebsch applied for a job at a utility he voted to approve a major power line project for. He didn't get that job, but records show he was in close contact with company officials.

  • - Former PSC chair Rebecca Valcq spent her career as a regulatory attorney for the state's largest utility before being appointed by the governor.

  • Robert Garvin, a former commissioner of the Wisconsin Public Service Commission, left his regulatory role and was later appointed as the executive vice president of external affairs at WEC Energy Group, a major utility company in Wisconsin.

This move from regulator to regulated industry executive are prime example of the "revolving door" phenomenon, where officials transition between government oversight roles and the corporations they previously oversaw. This "regulatory capture" can lead to decisions that favor utility shareholders over ratepayers. Neighboring states have stricter ethics rules to prevent such conflicts of interest.

Falling Behind on Clean Energy

Finally, Wisconsin's failure to embrace clean energy is costing ratepayers. While nearby states are rapidly transitioning to renewable power, the PSC continues to approve expensive fossil fuel projects.

State | Renewable Energy Target

  • MN | 100% carbon-free by 2040

  • MI | 60% renewable by 2030

  • IL | 50% renewable by 2040

  • WI | No mandatory target

Investing in solar and wind now, with costs at record lows, can save customers money. But the PSC's recent strategic energy assessment doubles down on gas, which will likely get more expensive over time.

The accelerating pace of coal retirements, more frequent severe storms, and the scale of proposed gas investments and grid upgrades are putting unprecedented demands on the WPSC's limited staff and resources. Outside experts argue the WPSC needs expanded capacity and authority to adequately regulate this fast-changing energy landscape.

Meaningful public input is difficult with highly technical utility filings and limited opportunities for engagement. Ratepayer advocacy groups have far fewer resources than the utilities to make their case at the WPSC. Stronger public interest oversight from the Attorney General could help level the playing field.

A Path Forward

Fixing these deep-rooted issues will require major reforms, but models exist. Some key policies to consider:

- Empowering the Attorney General to advocate for ratepayers in PSC cases

- Implementing stricter ethics rules and cooling-off periods for regulators

- Requiring more transparency and public input in PSC decisions

- Establishing mandatory renewable energy targets in line with neighboring states

We Energies is proposing the following rate hikes other investments cost for their gas infrastructure:

2024 Rate Hike Proposal:

  1. $86.3 million (2.5%) increase for electric rates

  2. $22.2 million (2.9%) increase for Wisconsin Gas LLC natural gas rates

  3. $23.9 million (4.5%) increase for Wisconsin Electric Gas Operations natural gas rates

For a typical residential electric customer, this would mean an increase of less than $4 per month. A typical natural gas customer would see an increase of $2 to $3 per month.

2025-2026 Rate Hike Proposal:

  • 6.9% electric rate increase in 2025 and 4.6% increase in 2026

  • 10% gas rate increase in 2025 and 5.1% increase in 2026 for one gas utility

  • 8.2% gas rate increase in 2025 and 3.6% increase in 2026 for the other gas utility

  • If approved, a typical residential electric customer's bills could rise $10-$11 per month in 2025 and $7-$8 in 2026.

Gas Infrastructure Investments:

  • $1.2 billion to convert the Oak Creek Power Plant from coal to natural gas by 2028

  • $200 million to build a liquefied natural gas storage facility in Oak Creek

  • $211 million to install gas-fired engines near the Paris Generating Station in Kenosha by 2026

  • We Energies says the natural gas units will primarily serve as backup power for times when renewable energy is not available. Critics argue this investment goes against the company's net-zero energy goals.

  • Renewable Energy Investments:

  • The proposed rate hikes include costs for renewable energy projects that have already been approved by regulators and are coming online in 2023-2024.

  • We Energies says customers will save about $2 billion over 20 years due to the clean energy transition, even with the upfront costs.

Tree Trimming Requests:

  • We Energies plans to spend $25 million in 2024 to accelerate removal of dead and dying trees that threaten power lines, a major increase from its typical forestry budget.

  • The utility says more frequent severe storms are damaging trees and causing outages. It had to spend $9.5 million on storm repairs in January 2024 alone.

  • We Energies trims and removes trees near power lines as part of routine maintenance. Property owners are responsible for debris removal.

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