In a stunning policy reversal, Madison Gas and Electric (MGE) submitted a proposal to lower monthly charges and raise energy rates for its residential electric customers. Filed on September 3rd, MGE’s rate application is strongly backed by customer groups and clean energy organizations, including RENEW Wisconsin.
MGE’s filing is the product of negotiations over the summer with RENEW and other parties intervening in the case. If approved as is by the Public Service Commission (PSC), the agreement will pare the fixed charge for residential electric service from $19 per month today to $17 per month in 2022 and $15 per month in 2023. At the same time, energy rates will rise to offset the proposed reduction in the fixed charge.
The monthly fixed charge is the minimum amount assessed on residential customers for electric service. These charges do not vary with energy consumption levels. Hiking fixed charges invariably depresses the volumetric rate assessed to energy consumption, penalizing customers who use relatively little electricity and those who supply themselves with solar power produced onsite. Alternatively, lowering fixed charges and raising energy rates should achieve the opposite result by sending a stronger price signal to incentivize customer investments in energy efficiency and onsite solar.
“Low-income customers, solar customers, and customers who have invested in energy efficiency to reduce energy bills will benefit from this shift,” said Heather Allen, Executive Director for RENEW Wisconsin. “Overall, MGE customers will benefit because reduced energy demand helps limit the need for additional generation capacity. This is a win-win.”
The settlement avoids a contested case hearing in which Citizens Utility Board (CUB) and RENEW had been planning to submit testimony demonstrating that the $19 per month charge was excessive, especially in an urban service territory where the majority of electric customers are renters living in multifamily dwellings.
The MGE settlement follows a similar one struck with Xcel’s Wisconsin utility several months ago. Under the terms of that settlement agreement, which RENEW, CUB and other organizations signed onto, Xcel agreed to lower its fixed charge for residential electric service from $17 per month to $16 per month in 2022 and $15 per month in 2023. As with MGE, Xcel’s energy rates will also increase.
Other positive outcomes of the settlement include MGE’s support for a low-income thermostat pilot program, exploration of further innovative ways to help low-income customers achieve lower energy bills, and MGE’s increased support for smart thermostats and technologies, such as controlled water heaters, heat pumps, and battery electric storage in future filings.
The PSC is now accepting public comments on the MGE rate case. If you’d like to support the settlement agreement, please communicate your thoughts to the PSC via this public comment webpage specific to this case. For more information on the MGE rate case, see the Wisconsin State Journal article here.