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Three Wisconsin utilities apply for rate hikes in 2024, citing renewable energy construction costs

Citizens Utility Board concerned about 'excessive profit rates' by private utilities

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a row of watt-hour meters
In this May 6, 2009 photo, watt-hour meters track electricity used by residents of an apartment building in St. Marys, Pa., Wednesday, May 6, 2009. J. Scott Applewhite/AP Photo

Three utilities have submitted proposals to the Public Service Commission of Wisconsin to increase rates in 2024, and consumer advocates worry about how rate hikes could affect customers.

Those utilities are Alliant Energy, Xcel Energy and Madison Gas and Electric. The Public Service Commission, or PSC, is reviewing their requests for adjusted rates.

The utilities cite the upfront costs of renewable energy projects as one of the factors for the proposed rate increases. In the long run, they say those projects could help stem future rate increases. But a consumer watchdog worries that profits and serving shareholders, rather than customers, are also motivating factors.

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Although they haven’t filed applications yet, WEC Energy Group’s utilities — We Energies and Wisconsin Public Service — are also expected to propose rate increases later this year, according to Tom Content, executive director of the Citizens Utility Board of Wisconsin, a nonprofit group that advocates for utility customers.

Alliant proposes the highest rate increase of those filed so far

Of the three to propose rate increases so far, Alliant’s were the steepest. The Madison-based utility, which serves south central and parts of central Wisconsin, applied for electric rate increases of 8.4 percent next year and 5.4 percent in 2025, along with a natural gas increase of 6.3 percent in 2024.

The company is also looking to add a surcharge to customers beginning in October and running through 2025 to recover $122.5 million in lost revenue from higher than expected natural gas costs in 2022. That surcharge would equate to a roughly 4.1 percent rate increase for customers.

“Customers have been facing a lot of increases with inflation and everything,” Content said. “But with Alliant, (customers) are seeing one hit after another when it comes to their bills, potentially.”

In a statement, Alliant attributed its recent requests to the company’s efforts to accelerate the transition to renewable energy — like retiring coal-fired power plants and construction of new solar energy projects — as well as estimated fuel costs in the coming years.

“We’re taking action now in order to best manage costs, increase resiliency and build a stronger energy future,” said JP Brummond, the utility’s vice president of customer and community engagement in a statement. “Nobody wants to see their bills go up, including us. However, there are more costs down the road if we do nothing or simply continue ‘business as usual.’”

Xcel Energy proposal is in the middle of the road

Xcel Energy’s proposed rate increase for 2024 came in between those proposed by Alliant and Madison Gas and Electric. Xcel Energy serves parts of western and northwest Wisconsin.

For 2024, the utility requested a 4.8 percent increase in its electric rates and a 5.3 percent increase in its gas rates for the year. Xcel did not propose additional increases for 2025.

In a press release, Xcel said its proposal equates to an estimated increase for residential electric customers of $9.54 per month, and $4.54 for natural gas customers.

Mara Ascheman, the utility’s regional vice president of rates and regulatory affairs, told Wisconsin Public Radio the motivation behind the proposed rate increase is to increase investment in aging infrastructure and to continue advancing clean energy technologies.

“We’re rebuilding several transmission lines through our Wisconsin service territory, and we’re adding more wind and solar to our generation portfolio,” she said. “In addition, we’re making investments in new net meters, which will help our customers better manage their energy use and enhance the company’s ability to deliver reliable service.”

Madison Gas and Electric proposes lowest increase

Madison Gas and Electric, or MGE, proposed the smallest rate increases of the three utilities with a 3.75 percent electric increase next year and a 3.41 percent increase in 2025. It also asked for gas increases of 2.56 percent in 2024 and 1.66 percent in 2025. The utility serves the Madison area, as well as parts of southwest and central Wisconsin.

Steve Schultz, the utility’s corporate communications manager, said in an email that the proposed electric rate increase includes investments in solar projects, grid modernization and collections of uncollectible costs related to the COVID-19 pandemic.

“We’re working to achieve greater sustainability and to manage long-term costs by growing our use of carbon-free, renewable energy, which carries no fuel costs and serves to reduce rate volatility and manage long-term costs into the future,” he said.

Schultz said the natural gas increase includes collecting lost costs from the COVID-19 pandemic and investments in system modernization.

Watchdog finds fault with utility increases

Content said private utilities in Wisconsin have a “fiduciary responsibility” to their shareholders to bring in higher returns every year. But he said Wisconsin, like many states, has been forcing customers to overpay to support “excessive profit rates.”

“Bills can be 30 percent to 40 percent cheaper for Wisconsinites who live in those cities where the city owns their utility, versus the residents who have companies traded on Wall Street as their utility,” Content said. “That just shows the power and the impact of pushing these growth plans that are pushing high profits at the expense of customers.”

Content noted that Alliant energy is trying to have more dollars flow through the side of the company that gets a 10 percent profit rate, and that Xcel Energy is seeking to increase its profit rate from 10 percent to 10.25 percent through the rate hikes.

“They actually want to go up on their profit rate, which we thought was fairly bold at a time when the PSC already sent a message last fall that they wanted to see the profit rates come down,” he said.

In a statement, Brummond said Alliant currently has the lowest residential electric rates among peer utilities.

And Content said rates for Madison Gas and Electric Customers went up at the start of 2023 and the proposed increases would compound the issue for customers.

“That’s one of the challenges is just this kind of pancaking effect,” he said. “It looks like it’s just over 3 percent a year, but that’s on top of increases that we’ve already been seeing.”

Editor’s note: The Citizens Utility Board of Wisconsin and Alliant Energy are underwriters of Wisconsin Public Radio.

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