Renner Barsella, renner.barsella@sierraclub.org
MADISON, WI -- Today, a settlement agreement was filed between Madison Gas and Electric Company (MGE), Sierra Club, Clean Wisconsin, Citizens Utility Board, RENEW Wisconsin, the Board of Regents of the University of Wisconsin System, and Wisconsin Industrial Energy Group in the utility’s rate case.
In response, Sierra Club Wisconsin Director Elizabeth Ward released the following statement:
“We saw forward-momentum in this settlement. After years of overcharging customers for extremely high fixed fees, this settlement represents a necessary decrease to the charge for all customers. However, MGE continues to add arbitrary costs to the fixed fees, beyond basic customer costs. This is unfair to customers and high fixed fees disproportionately affect low-income and fixed-income customers.
In additional good news, MGE agreed to stop charging its customers for its dues to industry organizations. These organizations are well known advocates for fossil fuel interests and against a transition to a clean energy future. It’s absurd that customers have been forced to pay for fees that often work against their best interests.”
Background on Fixed Fees:
From 1974 until 2011, the Public Service Commission interpreted its statutory rate setting authority to require that “fixed monthly charges reflect customer-related costs” that are generally limited to “meter reading, billing, connection costs, and that part of distribution costs that has been designated as varying only with number of customers.” And consistent with that order, the Commission during that time limited utility fixed charges to covering only the cost of the meter and meter reading, billing, and the short section of wires or pipes connecting a single customer to the utility’s system. Limiting fixed charges to cover those minimum customer-related costs is still the typical rate structure for regulated utilities around the country and for some municipal utilities in Wisconsin.
Wisconsin has become an outlier in the last decade by allowing Wisconsin’s investor-owned utilities to collect costs beyond basic customer costs in their fixed charge. Specifically, in 2011 and 2012 the Public Service Commission abruptly - and without adequate process - changed its interpretation and allowed utilities to significantly increased fixed charges to cover additional “fixed costs” beyond basic customer costs. The Commission never defined the extent of those additional “fixed costs” but they clearly extend beyond the costs allowed under the Commission’s historic interpretation.
Not only do the high fixed charges approved by the Commission incentivize energy waste, but they are also regressive by charging lower-use customers who tend to be lower and fixed income customers, more than higher-use customers. Because of existing societal inequities, communities of color are disproportionately low and fixed income utility customers. Thus, while possibly unintended, by approving rates with high fixed charges the Public Service Commission disproportionately burdens lower and fixed income customers, people of color, and older customers. To remedy this situation, the Commission should revert utilities back to the pre-2011 set-up, where utilities were only able to assess fixed charges to cover the customer-specific costs delineated above.
About the Sierra Club
The Sierra Club is America’s largest and most influential grassroots environmental organization, with more than 3.5 million members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.