The We Energies Rate Case

Overview

We Energies has launched a wide-ranging assault on self-generation in its territory. It proposes radical changes to its distributed generation tariffs that would, if approved, wreak lasting damage to Wisconsin’s renewable energy industry. Of these changes, the most damaging of the changes are outlined below.

  • A requirement on customer-generators to own their generation equipment. No arrangements involving leases or third-party financing would be allowed.
  • A new charge applied to distributed generators that reduce the return on their systems by nearly 30%. All customer-sited generation systems installed after January 1, 2016 would be subject to this de facto tax, as well as existing customer generators not selling electricity under a power purchase agreement.
  • A switch in the true-up period for net metering (calculating generation and consumption) from an annual basis to a monthly basis. This seemingly innocuous accounting change will in many cases lower the economic return from electricity exported to the grid.

We are not aware of any other utility proposals that attempt to punish existing customer-generators with new charges, let alone imposing restrictions to prevent utility customers from accessing standard financing mechanisms. This combination of restrictions and de facto taxes will certainly foreclose further development of solar and biogas energy systems in We Energies territory. In fact, it is already having a chilling effect on the businesses working in these sectors.

Media and Summaries

We Energies' war on its solar customers - Shepherd Express / Express Milwaukee, Lisa Kaiser, August 27, 2014

Electric rates could rise 5% in January for We Energies customers - Tom Content, Milwaukee Journal Sentinel, August 23, 2014

Wisconsin utility companies take aim against solar power - Judy Newman, Wisconsin State Journal, July 28, 2014

We Energies also faces opposition for its proposed rates - Judy Newman, Wisconsin State Journal, July 28, 2014

"Utilities Seeking a Competitive Edge" - Dan Shaw, Daily Reporter, July 16, 2014

Summary Materials

Michael Vickerman's Testimony August 28, 2014 - summary of impacts to solar customers

Karl Rabago's Testimony August 28, 2014 - We Energies has not justified their proposed charges

Rick Gilliam's Testimony August 28, 2014 - principles for guiding regulation of distributed solar generation

SunVest Matt Neumann Testimony August 28, 2014 - impacts on SunVest's business in Wisconsin

We Energies Launches Assault on Distributed Generation: Rate Filing Aims to Bleed Small Renewables Dry - a presentation by RENEW Wisconsin, July, 2014

We Energies Proposes Changes to Electricity Rates for 2015-16 -  Milwaukee Shines, the City of Milwaukee's solar program



Discussion

SunVest Lutheran College installation

RENEW business member Sunvest Solar installing a solar PV system at WI Lutheran College

We Energies’ rate filing includes a proposal to reorganize and consolidate its distributed generation DG tariffs. Beginning in January 2016, all existing and new customer-generators will be placed into one of four service groupings: net metering (NM), non-purchase (NP), direct-sales (DS) and stand-by service. Most of the existing DG tariffs will be discontinued at that time. A few will continue for a short period of time until all the customers under that service have been moved to one of the four new groupings.

To the extent there is any grandfathering of existing generators from We Energies’ proposed terms of service, it is limited to individual customer contracts in CG-4 (net metered wind between 20 kW and 100 kW), CG-5 (biogas generation up to 2 MW), and CG-6 (renewable energy up to 20 kW), until those contracts expire. Existing DG systems owned by third parties will still receive service under any of the proposed tariffs, but new customers must own their generation equipment. What constitutes “ownership” is not defined in the proposal.

The legal basis for asserting an ownership requirement is not clear. The Iowa Supreme Court ruled in July 2014 that behind-the-meter generation does not meet the standard of a utility service, as the installation merely augments but does not replace electrical service from the local utility. Wisconsin’s interconnection rule (PSC 119) does not provide any support for this restriction, since the rule is completely silent on the question of ownership.

Generation equipment owned by non-demand-metered customers would be subject to a new capacity demand charge (We Energies’ term), irrespective of whether these customers are compensated for any energy exported to the grid or not. The capacity demand charge is tiered depending on “intermittency” of generation, with $3.79/kW applicable to solar and wind generators and $8.60/kW applicable for baseload generators. Wind and solar generators serving demand-metered customers would not be subject to this new charge.;

Impacts

How large an economic hit would be absorbed by the average residential solar electric system owner? According to We Energies, the typical net metered solar electric system in its territory has six kilowatts (kW) of generating capacity. Assuming a south-facing exposure, a six kW solar system should produce on average about 7,000 kilowatt-hours (kWh) a year. With retail rates at about 13.8 cents/kWh, this six kW system would generate about $80 of electricity a month, or $960 in a year. The monthly bite from this de facto tax would be $22.75, or 28%. This particular charge effectively nullifies the first 164 kWh of production from a 6 kW solar installation.

New NM and DS customer-generators would be required to have a second meter for their generation equipment. A new facilities charge will be assessed to pay for these meters. For non-demand-metered customers, this monthly fee would amount to approximately $3.25/month. Because NP customers would not be credited for any generation exported to the grid, they are not subject to the facilities charge.

Between the capacity demand charge and the facilities charge, an NM solar customer would have to generate nearly 190 kWh in a month before the equipment begins producing a return.

The economic harm from this proposal would not be limited to solar system owners. Dairy farms that have installed biodigesters would be saddled with an $8.60/kW charge in a billing period. Thus a dairy operation with a 600 kW biogas generation system would pay an additional $5,000 to $6,000 in order to export electricity to the grid. A charge of this magnitude would likely force dairy system operators to shut down their generators and use the biogas for other purposes.

What you can do

Public comments are being taken the We Energies rate case. To file a comment, go to the PSC's web site. Click on Public Comment, then search for We Energies 2014 rate case (Docket No. 5-UR-107). The comment period will run until October 7, 2014.

See our Take Action page for additional ways to get the word out.

Case Schedule

  • Thursday, August 28, 2014 at 12 noon -- Direct testimony and exhibits.
  • Friday, September 12, 2014 at 12 noon -- Rebuttal testimony and exhibits.
  • Monday, September 22, 2014 at 12 noon -- Surrebuttal testimony and exhibits.
  • Tuesday, September 23, 2014 at 12 noon -- Prehearing testimony and exhibit errata.
  • Wednesday, September 24, 2014 at 9:30 am --Party Hearing Session – Madison
  • Tuesday, October 7, 2014 -- Public Comments due in writing
  • Wednesday, October 8, 2014 at 2:00 pm and 6:00 pm --Public Hearing Session, Wilson Senior Center, 2601 West Howard Avenue, Milwaukee, WI