PSC Limits How Much Consumers Help We Energies Pay For Closed Coal Plant

Oct 31, 2019

State regulators have given preliminary approval to a deal pertaining to the closed We Energies coal-fired power plant in Pleasant Prairie. That action could drive down a proposed utility rate hike

But the Public Service Commission (PSC) of Wisconsin says Thursday’s ruling doesn't lock in how the state will handle additional coal plant shutdowns that are expected in coming decades. 

The Pleasant Prairie Power Plant was one of Wisconsin's largest when We Energies shut it down 18 months ago because of high operating costs. 

In a rate case filed this year, the company sought to recoup some of its investment in the plant by charging ratepayers more money. In August, We Energies and groups representing consumers and industries reached an agreement to lower the proposed rate increase and allow We Energies to refinance $100 million of its investment. The company can also keep earning a profit on part of its previous spending on the plant. 

PSC Commissioner Ellen Nowak praises the deal.

"I'm glad to see they reached an agreement. It works well here, and there will be some savings to ratepayers as a result of securitizing $100 million of that remaining book balance," Nowak said at Thursday’s PSC meeting.

PSC Chairperson Rebecca Valcq speaking earlier this year in Milwaukee.
Credit Chuck Quirmbach

PSC Chairperson Rebecca Valcq praises a process created in 2017 that allows the Commission to approve a settlement with some parties in a case, even if other groups object. "The process we've laid out, I think, is working. I think it's better as we're going on," Valcq said.  

The Commission did not go along with a push by environmental groups to make We Energies close some, or all, of its huge coal-fired power plant in Oak Creek. But with Wisconsin utilities promising to reduce their carbon emissions in the coming decades, additional power plant shutdowns are expected somewhere, at some point. 

That could leave more utilities with what the industry calls stranded assets — or investments no longer producing a return. PSC Commissioner Mike Huebsch says the Pleasant Prairie agreement shouldn't be viewed as a template for other cases.

"It will not necessarily work everywhere. And as we see more stranded assets, or at least the push toward more stranded assets, in the future, we're going to have to be very cognizant as to how that is resolved," Huebsch said.

We Energies says the decision allows the company to "continue on the path to a cleaner energy future that is safe, reliable and affordable."

The Citizens Utility Board (CUB) calls the PSC ruling a "compelling win" for customers. CUB says along with some expected adjustments in utility fuel costs, We Energies' rate increase next year may only be .5%. But a PSC spokesperson cautions a final figure won't be set until the Commission decides other parts of the rate case. CUB says that may occur within a few weeks. 

The Sierra Club indicated disappointment with the PSC action. Elizabeth Katt Reinders, of the group's Beyond Coal Campaign, said, "Commissioners are leaving unaddressed substantial evidence provided by the Sierra Club that customers are paying millions in excessive costs to keep aging coal-burning power plants operating, including $75 million more for the South Oak Creek Coal Plant than if the plant were retired." 

Katt Reinders says the Sierra Club is, "considering options in the proceeding."

Shortly after the PSC decision, Alliant Energy said it plans to add 1,000 megawatts of solar energy in its Wisconsin territory by 2023. That would be large enough to supply nearly 3% of the state's electricity needs.

Alliant says it will locate its first "Community Solar" in Fond du Lac County and break ground in 2020.

Support for Innovation reporting is provided by Dr. Lawrence and Mrs. Hannah Goodman.

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