We Energies customers will see their electric bills rise Jan. 1, with double-digit increases projected for the utility’s biggest ratepayers.
The utility’s largest energy-users – factories and other large businesses – can expect their bills to jump about 13% on average, said Brian Manthey, utility spokesman. Most other business customers can expect electric bills to rise 8% to 10%.
Residential customers can expect an increase of less than 5%.
By comparison, the rate of inflation increased 1.1% from a year ago, according to the latest report from the U.S. Labor Department.
The culprit behind the Jan. 1 increase is the loss of credits that were linked to the sale of the Point Beach nuclear power plant several years ago. Those credits, which have expired, helped mask a substantial rate increase in 2008.
Since 2008, We Energies has refunded more than $700 million to Wisconsin customers from the $1 billion sale of the Point Beach nuclear plant to NextEra Energy Resources, a subsidiary of FPL Group Inc. of Juno Beach, Fla.
For business customers in particular, the credits have helped offset increases on their bills, even as the utility has received approval to raise rates to compensate for higher fuel costs and power plant construction.
Todd Stuart, executive director of the Wisconsin Industrial Energy Group, said his members who are We Energies customers face increases in the range of 12% to 15%, although one energy-intensive firm faces a 20% increase.
“Most of our members have been aware of it for some time, but that doesn’t mean it’s not going to hurt when those credits come off,” he said. “There’s going to be a sting; there’s no doubt about it.”
Stuart was lobbying the state Public Service Commission to reject a big rate increase three years ago when the commission also authorized the credits to start flowing back to customers.
“That’s truly the underlying problem, that the increase in 2008 was 17%,” Stuart said. “And the credits have been masking that, until now.”
We Energies says the biggest energy users benefited the most from the Point Beach credits. Over the last three years, $397 million was sent back to big customers, while residential and small-business customers received $312 million.
To prepare businesses for the coming increase, the utility has contacted 20,000 of its largest customers and has included a message on bills to explain the change that hits with the dawn of 2011, Manthey said.
“We want customers to know what these credits have done over the last three years, over some very difficult economic years. You put that in perspective, and we now are letting them know that they’re going away, and help them plan and budget going forward as to what their costs will be.”
But more increases are in the offing. The Public Service Commission will hold hearings in Milwaukee, Whitewater and Madison on Jan. 6 concerning a proposal to raise rates in 2011 because of higher costs to deliver coal to Wisconsin from coal mines in Wyoming.
A PSC staff review put that increase at less than 1%.
The utility also is expected to file initial paperwork in March for a two-year rate plan that is expected to result in an increase for 2012-’13. The causes behind that rate case are costs associated with a wind farm under construction north of Madison and with a proposed $255 million biomass power plant at the Domtar Corp. paper mill in Rothschild.
Cost overruns, if any, from the We Energies coal-fired power plant project in Oak Creek could be an issue in that rate case.
Analyze those bills
Businesses looking to curb their costs might want to analyze their bills and see whether they are in the correct rate class, Manthey said. It’s possible that changes in energy usage during the economic downturn might make them eligible for a different rate.
Stuart knows of several companies studying whether to make that change or switch to a new, more extensive time-of-use pricing program that We Energies plans to offer.
The statewide Focus on Energy program, which targets most of its energy-efficiency incentives toward the business sector, is seeing increased demand for its services, said marketing manager Amanda Wollin.
Focus on Energy is expected to receive additional funding from utilities beginning in January to provide customers with incentives to invest in measures that curb energy use. Ratepayer bills would increase slightly in 2012 to help cover the increased incentives, a PSC spokesman said.
Residential customers of We Energies can expect an increase of about $5.50 a month for a typical customer beginning Jan. 1. That represents a 4.7% increase in customer bills for residential customers, who now pay more than $99.50 a month.
Manthey said customers could offset some of those higher costs if they agree to have their air conditioner turned off on summer days when power demand spikes. The utility provides bill credits to those customers under its Energy Partners program, he said.