April 6, 2008
Wisconsin

PSC expands reach of regulatory duties; Panel to decide wind turbine, other issues

State energy regulators, long known for making decisions on how much utility customers pay and whether utilities can build new power plants and transmission lines, are expanding their reach.

The Public Service Commission will soon be involved in issues relating to global warming, from a study of whether to put wind turbines in Lake Michigan and Lake Superior to an evaluation of ways the state can cut energy use to reduce power plant emissions.

The agency has just kicked off five different proceedings to address recommendations made by the task force on global warming appointed by Gov. Jim Doyle.

The commission needs to follow up on the work of the global warming task force and will spend the next year or so looking at “what are the things we can do as a state to start to address global warming,” said Dan Ebert, commission chairman.

“We’re trying to put on the table what are the real implications” of policy proposals such as a task force recommendation to reduce the state’s electricity use by 2% a year, beginning in 2015, he said. “We fully expect there will be a lot of debate and discussion.”

But that doesn’t mean the PSC’s typical regulatory duties have gone away. Before the end of the year, the commission will make key decisions on nearly $2 billion worth of controversial power plant and power line projects, and rule on utility requests to boost electricity prices by more than $300 million.

Cost is a key concern, say representatives of customer groups who are concerned about rate increases recently sought by power companies.

On average, Wisconsin residential customers paid the highest electricity prices in the Upper Midwest last year and pay rates that are higher than the national average, says a new report, released last month by the federal Energy Information Administration. Factory customers’ bills, which jumped 5% on average last year, were ranked second-highest among eight Midwestern states.

“There is a lot going on,” said Charlie Higley, executive director of the Citizens Utility Board, which represents residential and small-business ratepayers. “It’s a mirror of the fact that we are faced with rising energy costs; our utilities are in the middle of building many power plants and want to build more, which all means rising costs.”

To that, add growing concern about rising emissions linked to global warming, which are now on the agenda at an agency which, since last summer, is led by three commissioners all appointed by Doyle. The governor has made expansion of renewable energy and reducing global warming key policy initiatives.

PSC chairman Ebert said the need to bring down carbon dioxide emissions is critical and emissions from electric power plants are poised to rise by 1.4% a year if the state takes no action.

Ebert said the agency must “strike a balance” between having a reliable supply of energy and reducing emissions linked to global warming “while mitigating impacts to the state’s energy customers and to support continued economic growth in the state.”

But customer groups are concerned about how much added cost customers can bear. Manufacturers have expressed concern about utilities’ cost to comply with environmental and clean-energy mandates.

Higley said he’d like to see more attention placed on energy efficiency, providing customers with more tools to bring their energy costs down.

Even as it launches studies related to global warming, the commission faces four new requests for price increases filed by utilities in eastern Wisconsin over the past month, including Milwaukee-based We Energies.
New coal plants

Perhaps most challenging will be a decision on whether to allow Wisconsin Power & Light Co. of Madison to build a coal-fired power plant on the Mississippi River at Cassville.

Wisconsin has already given permission to two state utilities to open new coal plants, the first of which, near Wausau, is poised to begin generating electricity in the coming months. New coal plants under construction by We Energies in Oak Creek are projected to start generating power in 2009 and 2010.

The WP&L proposal is being challenged by environmental groups including Clean Wisconsin and the Sierra Club.

WP&L representatives say the coal plant is part of a broader energy strategy that calls for big jumps in the use of wind power and energy efficiency. They are designing their plant to burn primarily coal, but at least 10% of the fuel source would be renewable feed stocks such as wood chips or switchgrass, said Rob Crain, a spokesman for the utility’s parent company, Alliant Energy Corp.

At a recent energy conference in Milwaukee, an advocate for renewable energy criticized the Doyle administration for being hypocritical, calling for actions to reduce carbon dioxide emissions while authorizing construction of new coal-fired power plants in Oak Creek and Wausau.

Matt Frank, secretary of the state Department of Natural Resources, responded that proposals for new coal plants would be carefully studied in light of heightened concern about global warming.

At a glance: Hot Energy Topics

Electric rate increases totaling $303.2 million sought by We Energies, Wisconsin Power & Light Co., Wisconsin Public Service Corp. and Madison Gas & Electric Co.

PSC action expected: By year’s end

Utility projects

• We Energies proposal to build environmental scrubbers at the Oak Creek power plant, $750 million.

PSC action expected: Within the next month.

• American Transmission Co. proposal to build Paddock-Rockdale 345,000-volt transmission line in Dane and Rock counties, $133 million.

PSC action expected: By May.

• ATC proposal to build Dane County 345,000-volt transmission line linking east and west sides of the county, $213 million to $250 million.

PSC action expected: By October.

• Wisconsin Power & Light & Co. proposal to build new coal-fired power plant in Cassville, southwestern Wisconsin, $850 million to $950 million.

PSC action expected: By December.

Global warming matters

• Study of potential of building wind turbines offshore in the Great Lakes.

Timeline to complete study: By year’s end.

• Study of potential of burying carbon dioxide in geological formations in Wisconsin or shipping it via pipeline to another state.

Timeline to complete study: By year’s end.

• Three other proceedings would revise PSC policies to tap greater use of energy efficiency and conservation. Possible changes include greater funding for energy efficiency programs, new electric rates that reward conservation and revisions in how utilities earn their profits.

Timeline to implement new policies: No firm deadline.

By Thomas Content