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2 of Wisconsin’s largest utilities seek to raise rates as part of clean energy transition

Customers with We Energies and WPS could see monthly bills rise by $5 to $6 beginning next year

solar farm
The first 150 megawatts of the 300-megawatt Badger Hollow solar farm went online on Dec. 1, 2021. Wisconsin Public Service and Madison Gas and Electric own the project, which was developed by Invenergy. The first phase is expected to power 45,000 homes. Photo courtesy of Wisconsin Public Service

Residential customers with two of the state’s largest utilities may pay an extra $5 to $6 each month on their electric bill next year as part of proposed rate increases tied to the clean energy transition.

We Energies and Wisconsin Public Service, owned by WEC Energy Group, submitted applications Thursday to increase electric rates with the state Public Service Commission. We Energies is seeking an 8.4 percent increase in electric rates while Wisconsin Public Service is suggesting a 6.2 percent hike in electric rates.

The two utilities are seeking to raise rates related to more than $1 billion of investments in renewable energy. The rate hikes are also expected to pay off investments in coal-fired power plants set to be retired within the next two years.

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“We have set some of the most aggressive goals in our industry for reducing carbon and methane emissions. This rate plan will help us reach those goals and provide customers with the affordable, reliable and clean energy they depend on,” Scott Lauber, president of We Energies and Wisconsin Public Service, said in a news release.

WEC Energy Group has pledged to go carbon-neutral by 2050 and drop coal from its power mix by 2035.

The current average monthly bill for residential customers is about $109 for We Energies and $92 for Wisconsin Public Service, according to WEC Energy Group.

Natural gas customers would also see a small increase in their monthly bills as part of the plan, according to the utilities. The two utilities are seeking to raise rates between roughly 8 and 10 percent for gas. The increase is expected to cost customers between $4 and $8 more per month depending on the utility, Brendan Conway, spokesperson for WEC Energy Group, said.

“The increase is driven by our capital investments in renewables, battery storage, some natural gas generation and LNG storage, and a lot of those projects have already been approved,” Conway said.

Those projects include the second phase of the Badger Hollow Solar Farm in Iowa County, the Paris Solar-Battery Park in Kenosha County, and the Red Barn Wind Farm in Grant County.

The rate increases would also include plans to bury 800 miles of power lines in the next decade for We Energies’ system, and it would strengthen the resilience of service for both We Energies and Wisconsin Public Service.

WEC Energy Group has said customers are expected to save more than $1 billion over the next two decades as it invests in renewables and shifts away from coal. That includes plans to retire the South Oak Creek coal plant and a coal plant in Columbia County by the end of 2024. We Energies owns a majority share of the South Oak Creek plant, and Wisconsin Public Service co-owns the Columbia Energy Center with Alliant Energy and Madison Gas and Electric.

As part of that shift, customers are being asked to pay off more than $500 million worth of investments in the South Oak Creek and Columbia coal plants, Conway said.

Even so, he said customers will see millions of dollars in savings in fuel costs as they retire older fossil fuel plants.

But ratepayer advocates say the proposed hikes are a lot for customers to handle as natural gas prices and home heating costs have increased.

“As our experts start to look at this case, the utilities are both looking to keep profiting from coal plants that are being shut down next year, for many years to come,” said Tom Content, executive director of Wisconsin’s Citizens Utility Board. “So, that’s something we’re going to be diving into and trying to really find savings for customers.”

Content wants utilities to explore innovative financing to pay off investments made in coal plants. In 2019, the consumer advocacy group was part of a settlement that was negotiated with We Energies after it shut down its Pleasant Prairie Power Plant. That led to refinancing part of the facility’s remaining expenses, which is anticipated to save ratepayers around $40 million over time.

The utilities are seeking more than $475 million in additional revenues from customers next year. Content said the Citizens Utility Board will be looking at the profits that utilities are able to recover from coal plants that are shutting down. We Energies and Wisconsin Public Service are allowed to recover a 10 percent and 10.2 percent profit, respectively, on their investments.

We Energies serves more than 1.1 million electric customers and 1.1 million natural gas customers in Wisconsin. Wisconsin Public Service provides electricity to 457,000 electric customers and 338,000 natural gas customers.