Electric power lines. (Scott Olson | Getty Images)
State utility regulators approved a rate increase for Wisconsin Power and Light Thursday that was almost half what the electric power provider sought but put off decisions on two broader issues that had been raised by the company in its petition.
The Public Services Commission (PSC) voted to set aside how the cost of a 2025 shutdown of a Sheboygan coal-fired power plant should be covered.
The PSC approved a rate hike for WPL, a unit of Alliant Energy, that will average about 8.4% for 2024 through 2025. The company had sought a total two-year increase of 14%.
The commission also reduced the company’s profit margin, or return on equity, to 9.8% from its original request of 10%. The Citizens Utility Board, which represents the interests of consumers before the PSC, had propose a 9.3% profit margin but executive director Tom Content said that even with the smaller reduction, the commission “moved in the right direction on utility profits.”
Commissioners rejected a WPL proposal to change how it compensates homeowners with rooftop solar installations when they send excess power they generate back to the grid. The PSC also rejected a Madison Gas and Electric proposal Nov. 3 to change its compensation for rooftop solar.
Offsetting the costs of shuttering coal plants and changing the financial arrangements power companies have with homeowners with rooftop solar arrays were among the most closely watched elements of some of the rate increase petitions before the PSC this year.
In anticipation of the closing of its Edgewater 5 coal-fired power plant in Sheboygan in two years, the company had asked the PSC to add the projected $426.7 million cost to its base rates, spreading that cost over the next two decades.
Other groups intervening in the case had recommended requiring the company to refinance that value, lowering the profit margin the company is allowed to make on that portion of its rates. PSC Chair Rebecca Cameron Valcq ruled that out, however. While the utility could voluntarily offer to refinance, “We’re not within our authority to order securitization,” she said.
The commission had urged the company to offer a solution that would “mitigate the impact on customers,” Valcq added. “What we got back was really nothing. And it was incredibly disappointing.”
Since the coal plant won’t be retired until June 2025, Valcq said the question could be put off until WPL’s next rate case, when there will be a more accurate net book value for the cost.
Legislation introduced Thursday in the state Senate would allow the PSC to require refinancing any outstanding debt on a power plant being closed and impose a lower profit margin on the portion of its rates used to cover that cost.
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