From the testimony of Michael Vickerman in opposition to the request of Wisconsin Public Service Corporation to increase the cost of renewable energy purchased by customers in the NatureWise green-pricing program:
The purpose of my testimony is threefold: (1) to discuss how basing buyback rates on locational marginal pricing (LMP’s) penalizes low-risk renewable energy sources; (2) to encourage Wisconsin Public Service Corporation (WPS), with the support of the Commission, to establish a net energy billing tariff for small wind energy systems up to 100 kilowatts and (3) to urge the Commission to hold WPS’s NatureWise premium at 1.25 cents/kWh.
April 27, 2010
Renewable Energy Not Responsible for MGE Rate Increase
Higher costs associated with fossil fuel generation are driving Madison Gas & Electric’s costs higher, according to testimony submitted by company witnesses. The utility filed an application last week with the Public Service Commission (PSC) to collect an additional $32.2 million through a 9% increase in electric rates starting January 2011.
The bulk of the rate increase can be attributed to expenses associated with burning coal to generate electricity. A 22% owner of the 1,020-megawatt (MW) Columbia Generating Station near Portage, Madison Gas & Electric (MGE) and the owner plant owners plan to retrofit the 35-year-old facility to reduce airborne emissions. The cost of Columbia’s environmental retrofit is expected to total $640 million, of which MGE’s share is about $140 million.
MGE also owns an 8% share of the state’s newest coal-fired station, the 1,230-MW Elm Road Generating Station located in Oak Creek. A portion of the proposed rate hike would cover lease payments and other expenses at that plant.
MGE’s application does not attribute any portion of its proposed rate hike to renewable energy sources. However, MGE plans to increase the premium associated with its voluntary Green Power Tomorrow program from 1.25 cents per kilowatt-hour to 2 cents. RENEW estimates that the premium hike will collect more than $1 million in 2011 from the approximately 10,000 customers participating in the program.
According to the utility’s web site, 10% of MGE’s electric customers purchase some or all of their electricity from renewable resources. Moreover, Green Power Tomorrow has the second highest participation rate of all investor-owned utilities in the country according to the National Renewable Energy Laboratory.
Not surprisingly, MGE anticipates subscribership in Green Power Tomorrow to decrease if the PSC approves the higher premium. Currently, the program accounts for about 5% of total electric sales. Program subscribers include the City of Madison, State of Wisconsin, Dane County Regional Airport, Madison West High School, Goodman Community Center and Home Savings Bank.
According to MGE, sinking fossil fuel prices have widened the difference between wholesale power costs and the cost of supplying customers with renewable energy. However, it is worth remembering that the cost of supplying power from MGE’s renewable energy assets, such as its Rosiere installation in Kewaunee County and Top of Iowa project, did not increase last year and will not increase in the foreseeable future.
“Even though the cost of MGE’s windpower supplies is not going up, Green Power Tomorrow customers will take a double hit if the PSC approves this rate increase and request for higher premiums,” said RENEW Wisconsin executive Director Michael Vickerman. “It’s a ‘heads-I-win-tails-you-lose’ proposition that will wind up rewarding customers who drop out of the renewable energy program because coal is cheaper.”
“It would be short-sighted to penalize renewable energy purchasers just because fossil fuel prices are in a temporary slump,” Vickerman said. “But if MGE is allowed to institute this penalty at the same time it imposes the cost of cleaning up an older coal-fired generator on all of its customers, including its Green Power Tomorrow subscribers, it would have a profoundly negative impact on the renewable energy marketplace going forward.”
“This is the wrong time to be throwing up barriers to renewable energy development. We at RENEW will fight proposals that reward fossil fuel use and penalize renewable energy,” Vickerman added.
RENEW Wisconsin (www.renewwisconsin.org
) is an independent, nonprofit 501(c)(3) organization that acts as a catalyst to advance a sustainable energy future through public policy and private sector initiatives.
February 12, 2010
Senator Mark Miller
State Capitol, Room 317 East
Madison, WI 53707
Representative Spencer Black
State Capitol, Room 210 North
Madison, WI 53708
Dear Senator Miller and Representative Black:
RENEW Wisconsin and our members appreciate the opportunities you created for public input into the Legislature’s deliberations on the Clean Energy Jobs Act legislation. Certainly, the more we can ground public discussion in fact, the better the final outcome.
To that end, RENEW is pleased to provide the enclosed copy of the narrative and appendix of tables from an economic analysis that we commissioned.
The analysis concludes that special buyback rates (sometimes called Advanced Renewable Tariffs) designed to stimulate small-scale renewable energy installations would have negligible impact on residential utility bills, averaging about $10 a year. That’s less a dollar a month for the typical customer. And it’s less than a household’s cost of purchasing the smallest block of green power from Madison Gas and Electric, for instance.
Compared with other forms of economic stimulus, promoting small-scale renewables through utility buyback rates would deliver a substantial and long-lasting economic punch with minimal impact on the Wisconsin citizen’s pocketbook.
Prepared by Spring Green-based L&S Technical Associates, the study modeled rate impacts from the legislation’s provisions for ARTs on the state’s five largest utilities. The modeling predicts cost impacts ranging from a low of $8.12 a year for a residential customer of Wisconsin Public Service to as high as $11.07 for a Wisconsin Power and Light (Alliant) customer. The projected impact would amount to $8.81 a year for a We Energies customer, $9.71 for a Madison Gas and Electric customer, and $10.11 for an Xcel Energy customer.
The projections assume that when each utility reaches its maximum threshold of 1.5 percent of total retail sales. In the aggregate, this percentage equates to 1/70th of total annual sales. That’s one billion kilowatt-hours a year, out of total annual sales of 70 billion kilowatt-hour.
Though the principals of L&S Technical Associates serve on RENEW’s board of directors, they have prepared numerous renewable energy studies for other clients, including the U.S. Department of Energy, Energy Center of Wisconsin, and the Wisconsin Department of Natural Resources. L&S has also co-authored renewable energy potential studies in response to requests from the Wisconsin Public Service Commission.
The bill’s renewable energy buyback provisions would unleash a steady flow of investment that would lead to new economic activity and jobs while moving us toward energy independence – exactly what we all hope to accomplish by passage of the Clean Energy Jobs Act legislation.
January 28, 2010
Senator Jeff Plale
Room 313 South, State Capitol
Madison, WI 53708
Senator Mark Miller
Room 317 East, State Capitol
Madison, WI 53708
Dear Senators Miller and Plale:
Thank you for holding a hearing yesterday of the Select Committee on Clean Energy on SB 450 (the Clean Energy Jobs Act bill). You heard a great deal of substantive commentary about much of the bill, particularly the sections dealing with energy efficiency and the expanded Renewable Energy Standard.
Unfortunately, the same cannot be said for the discussion on the proposal to institute Advanced Renewable Tariffs in Wisconsin. Early in the hearing, a speaker framed the issue as “asking a little old lady in Cudahy to subsidize an expensive system in Mequon.” From that point, the discussion devolved into a kind of semi-orchestrated gang-tackling on this issue that continued unabated until I was called upon to speak, some seven hours and forty five minutes after the hearing began. While RENEW members who work for or with solar, wind and biogas energy installation companies were present during the hearing and had registered to speak, none were called prior to myself. All but two (Full Spectrum Solar and Ed Ritger) had to leave before the hearing ended.
Now, I don’t believe the first speaker, a labor leader, had intended to belittle the companies that install customer-sited renewable energy systems or dismiss their contribution to Wisconsin’s economy and environment. Nevertheless, the “little old lady from Cudahy” theme took a life of its own, and as a result, the very important issues of how to support these systems through utility rates and whether these rates should be mandated had become thoroughly trivialized by the end.
Allow me to repeat some of the points I made at yesterday’s hearing:
1. The vast majority of the distributed renewable generating units installed in Wisconsin serve schools, dairy farms and other small businesses, churches and local governments.
2. Utilities are not in the business of installing these systems themselves.
3. In many cases the renewable energy installation went forward because there was a special buyback rate available to accelerate the recovery of the original investment made by the customer. Yesterday, I gave the example of the Dane County community anaerobic digester project that, once operational, will treat manure taken from several nearby dairy farms in the Waunakee area and produce two megawatts of electricity with it. The electricity will be purchased by Alliant Energy through a voluntary biogas tariff worth 9.3 cents/kWh. Unfortunately, Alliant’s biogas program is fully subscribed and is no longer available to other dairy farmers, food processing companies and wastewater treatment facilities served by Alliant.
4. Companies that install solar, wind and biogas energy systems are quintessentially small businesses, many of them family-owned. Renewable energy contractors and affiliated service providers constitute one of the few market sectors where young adults who have acquired the necessary skills to do the job well can find meaningful work at decent pay.
5. By its very nature, distributed renewable energy delivers nearly 100% of its economic punch to the local economy.
In stark contrast to other states, Wisconsin has a well developed market structure for supporting small-scale renewables. Through the ratepayer-funded Focus on Energy program, there is in Wisconsin a human infrastructure that trains and educates thousands of young people to work in the renewable energy arena. Indeed, Wisconsin is a leader in this area. Our expectation is that these workers will apply their skills in the state, fabricating and installing renewable energy equipment in a thoroughly professional manner.
But if we don’t take equal care to create and sustain demand for their skills and services, these workers are apt to leave the state for greener pastures, and Wisconsin’s investment in their education will have gone unpaid. This is why the issue of Advanced Renewable Tariffs is so important to RENEW members.
The question of how to sustain and broaden the distributed generation marketplace is a serious matter that deserves careful consideration by the Legislature. As I mentioned yesterday, RENEW Wisconsin has a wealth of experience and expertise in designing forward-looking renewable energy policies, examples being the Act 141 renewable energy standard and We Energies’ voluntary renewable energy program, the most ambitious and innovative of its kind in the state.
We at RENEW would greatly appreciate the opportunity to meet with you and suggest some alternative approaches in the Advanced Renewable tariffs section that we believe would end the impasse between utilities and clean energy advocates and put the distributed energy sector on a sustainable growth trajectory. We would like very much the opportunity to discuss our alternative approach and provide any assistance you require in forging an acceptable compromise with the utilities.
One final point: yesterday you heard several utilities recommend that the Legislature strip out the Advanced Renewables Tariff section. RENEW urges you not to heed their advice. While we would support a reworking of this section, we cannot support abandoning this initiative altogether and cannot further support a bill that is silent on policies to advance the distributed energy marketplace. That is a bottom-line priority with us.
January 21, 2010
RENEW denounces WMC’s “fact-free flip-flop” in radio ad on energy bill
RENEW Wisconsin’s Executive Director Michael Vickerman assailed the credibility of a new radio ad launched by Wisconsin Manufacturers and Commerce (WMC) that characterizes the Clean Energy Jobs Act bill as an unaffordable extravagance.
“WMC executed an astonishing fact-free flip-flop with its claim that the legislation (AB 649/SB 450) would raise an average family’s electricity bill by more than $1,000 a year. What’s astonishing about it that WMC is conveniently forgetting existing ratepayer protections, which it endorsed – and claimed credit for — when similar legislation passed in 2006,” Vickerman said.
When the state’s current renewable portfolio standard (RPS) was passed (which directed utilities to source 10 percent of their electricity from renewable generation by 2015), WMC ran an article on its website with the headline “’Energy Efficiency and Renewables Act’ Will Protect Ratepayer Dollars.” That article can be accessed at http://www.wmc.org/display.cfm?ID=1256.
The article says that WMC was instrumental in ensuring that “ratepayer groups will have a clear opportunity to seek delays in the implementation of new renewable portfolio standards, should they have an unreasonable effect on electric rates.”
The Clean Energy Job Act bill would continue those ratepayer protections enacted in 2005 Act 141. So far no utility or energy advocacy group has requested an implementation delay under the current renewable energy standard.
In order for an average family’s bill to increase $1,000 a year, according to Vickerman, electric rates would have to double.
“That will never happen because groups like WMC, Citizens Utility Board, and the Wisconsin Industrial Energy Group would intervene aggressively on behalf of their member using the existing ratepayer protections,” Vickerman stated.
Since the adoption of Act 141’s renewable energy requirements, Madison Gas and Electric’s residential ratepayers have seen annual increases of only 0.8 percent through 2009, even though the utility is already in compliance with the 2015 standard, added Vickerman.
“This outrageous claim is just another example of WMC’s decision to lob grenades instead of working constructively to forge a responsible partnership with all parties to create family-supporting jobs in the clean energy sector,” Vickerman said.
“It’s clear that WMC made up its mind to oppose the Clean Energy Jobs Act bill long before its contents were even known to the public,” Vickerman stated.
“There is no more obvious proof of this than WMC’s sponsorship of a so-called study by the Wisconsin Pubic Research Institute (WPRI) that claims that the bill’s provisions to expand renewable energy supplies would cost utilities $16 billion.”
RENEW previously critiqued the WPRI report in a report titled “Think Tank Flunks Renewable Energy Analysis.” (https://www.renewwisconsin.org/2009/12/think-tank-flunks-renewable-energy_22.html)
“WPRI’s assertions demonstrate yet again that if you torture your economic models long enough, they will confess to anything,” Vickerman said.
RENEW Wisconsin is an independent, nonprofit 501(c)(3) organization that acts as a catalyst to advance a sustainable energy future through public policy and private sector initiatives.