Experts find no evidence to support proposal
Press Release from RENEW Wisconsin and Environmental Law & Policy Center
August 28, 2014
MADISON, WI – Expert witnesses criticized We Energies’ proposals to raise “fixed” charges for everyone and add fees and restrictions to customers that wish to generate clean, renewable energy on their own property, in testimony filed Thursday with the Public Service Commission of Wisconsin.
Experts for RENEW Wisconsin and the Environmental Law & Policy Center determined that We Energies’ proposed billing changes are unjustified, would reduce all customers’ ability to control their electricity bills, and would stifle the growth of energy efficiency and renewable energy.
Karl Rábago of Rábago Energy, LLC called the proposal “an astounding failure of basic ratemaking” and determined that the Company provided “no reasonable justification” for imposing charges on their customers.
Michael Vickerman of RENEW Wisconsin concluded the proposal would cripple the solar industry in Wisconsin, and would reduce a customer’s return from a new solar system by more than one-third (35%) and slash savings from an existing system by nearly one-half (47%).
Brad Klein, senior attorney at the Environmental Law & Policy Center, called the proposal a dangerous precedent. “We Energies is attempting to exert its monopoly power to restrict customer choice and take money out of the pockets of customers who use less energy.”
Tyler Huebner, executive director of RENEW Wisconsin said, “We Energies’ proposals, if approved, would punish customers who have done the right thing by going solar, and take away jobs for the small businesses that make a living in this industry which has grown nationally to over 140,000 employees through 2013.”
The new charges and service restrictions contemplated by We Energies include:
§ Increasing monthly fixed charges by more than 75%, which would disproportionately affect customers that use less energy (see “Robin Hood in Reverse” release)
§ Adding a new “capacity demand” charge that alone will offset nearly 30% of a customer’s savings from solar
§ Paying solar generators just 4.2 cents for each extra kilowatt-hour of electricity they create, while re-selling that electricity to other customers at up to 28 cents during peak daytime summer hours
§ Restricting solar energy financing options that help low-income customers, municipalities, churches and non-profits more affordably go solar
The expert witnesses’ main recommendations were to reject the utility’s proposals. “A broader discussion is needed to enable us to ‘look before we leap’ – to carefully examine both the benefits and costs of customers producing their own clean power before simply accepting this utility’s view,” said Huebner.
· RENEW Wisconsin’s testimony in this We Energies case can be found at the Public Service Commission’s website, http://psc.wi.gov/apps35/ERF_search/default.aspx, by searching for Docket 5-UR-107.
· Testimony in this case comes on the heels of testimony filed two weeks ago in the Wisconsin Public Service rate case, Docket 6690-UR-123, which RENEW Wisconsin characterized as “Robin Hood in Reverse.”
· RENEW also recently discussed We Energies’ proposed changes which would affect future biogas projects. See press release.
RENEW Wisconsin is an independent, nonprofit 501(c)(3) organization that leads and accelerates the transformation to Wisconsin’s renewable energy future through advocacy, education, and collaboration.
ELPC is the Midwest’s leading public interest environmental legal advocacy and eco-business innovation organization. We develop and lead successful strategic advocacy campaigns to improve environmental quality and protect our natural resources.
This article was published electronically August 14, 2014 in the Energy & Environment News Service and is re-printed here with permission from the reporter.
Evan Lehmann, E&E reporter
Four years ago, a Wisconsin Republican urged his party to overcome its fear of environmental action, saying that a conservative green movement could strengthen both the economy and GOP candidates. Then he got clobbered.
Now his son is taking a turn. Matt Neumann hopes to convince state officials that Wisconsin needs a big expansion of solar power. Among his audience are members of the Republican Party including friends of his father, former U.S. Rep. Mark Neumann, who was later defeated in back-to-back primaries, first for governor in 2010 and then for the Senate two years later.
The younger Neumann resembles his dad, a former math teacher, both in looks and in his conspicuous conservatism. They both promote the environment, and they hope to make money conserving it. They do have one big difference: “Politics drives me nuts,” Matt Neumann said.
Instead of running for public office, he’s making his energy pitch as president of the Wisconsin Solar Energy Industries Association and as the co-owner of a solar installation business that he runs with his father.
Matt Neumann, president of the Wisconsin Solar Energy Industries Association. Photo courtesy of the Wisconsin Solar Energy Industries Association
He enters public policy at a turbulent time. Wisconsin has seen its installation of solar systems drop since 2010, following eight years of modest growth. The state now has about 17 megawatts of installed solar power, enough to provide electricity to about 2,600 homes, according to Neumann’s group. That amounts to about 0.1 percent of the state’s renewable energy. In other words, it’s barely perceptible. [RENEW Wisconsin note: solar electricity accounts for less than 0.03% of Wisconsin’s electricity.]
The key reason behind Wisconsin’s sluggish growth is opposition by its utility sector, according to advocates of renewable energy. Utilities like We Energies, Wisconsin Public Service Corp. and Madison Gas and Electric Co. are pre-positioning themselves to avoid potential future losses from homegrown power, like solar arrays, by seeking fixed rates rather than charging customers for the amount of energy they use.
That can discourage conservation, clean energy advocates say, and it might dampen the economic impetus for installing solar on your rooftop: If a customer can’t lower his or her power bills by using solar electricity, then the investment doesn’t make sense, advocates say.
Neumann uses conservative touchstones to describe the state of things. For him, it’s a lack of “liberty” that prevents a property owner from choosing how to power his or her home or business. He said this absence of “energy choice” contradicts Republican tenets, which run strong in a state where the governor, Scott Walker, is favored by the tea party.
“We’re very conservative here in Wisconsin,” Neumann said. “The reality is free market capitalism, the choice to choose how you buy your energy, and how you finance that acquisition, the ability to lower your long-term energy costs — those are all very conservative principles and yet for some reason we’re struggling to adapt.”
Protecting customers, or profits?
Rate proposals currently being considered by the Wisconsin Public Service Commission would increase fixed monthly costs from $9 to $16 for customers of We Energies, the state’s biggest utility. Bigger jumps are being sought by Wisconsin Public Service Corp., which wants to double the fixed costs for residential customers to $25, and Madison Gas and Electric, which proposed a monthly fixed fee of $68 by 2017 before settling for $19 next year. That’s an 82 percent jump.
We Energies is also asking regulators to allow it to pay much less for electricity generated by homeowners, who can sell excess power derived from solar panels and other systems to utilities. The company is seeking to decrease the current price of 14 cents per kilowatt-hour to between 3 and 5 cents.
Cathy Schulze, a spokeswoman for We Energies, said the current price is above market rate, and the cost is passed on to other ratepayers. She also said the utility is moving to fixed prices to ensure that customers without solar aren’t required to shoulder more of the costs of maintaining the grid’s infrastructure — like poles, wires and utility employees.
“The costs are shifting to those people who don’t have their own generation right now,” Schulze said. “It may not be as big of a problem right now, but as that [solar] industry continues to grow, you’re going to see that disparity and that cost grow wider.”
Others see it differently. Tyler Huebner, executive director of RENEW Wisconsin, which advocates for cleaner power, said that the utilities are trying to cover recent investments in coal and gas plants with higher fixed fees. Customers shouldn’t be tied to the cost of those plants, he said, if they find cheaper, cleaner power alternatives.
If the buyback rate for excess solar power drops from 14 cents to 4 cents, it would price solar systems out of the marketplace, he said. “That’s the concern,” Huebner said.
Neumann said solar could thrive in Wisconsin if lawmakers would clarify that third-party ownership of solar systems is allowed. His company is an example. SunVest Solar Inc. installs its own photovoltaic systems on homes, businesses and churches, and then sells the power to the property owner at a fixed rate over 20 years.
The rate is usually equivalent to the cost of conventional electricity, or lower, Neumann said, and it can expand the use of solar power because property owners don’t have to buy the equipment, which can cost up to $15,000 installed for a home.
On climate change: ‘I don’t know’
He’s hopeful that Wisconsin lawmakers will pass legislation allowing third-party financing. But he said the “big thing” that Republicans will have to overcome is the utilities’ argument that solar could increase the cost of electricity on those customers who don’t have it.
“It’s just plain not true,” Neumann said, noting that solar power cuts cost on utilities and customers by generating power at peak demand periods.
But the utilities seem to have the ear of lawmakers. State Sen. Robert Cowles, a Republican and chairman of the Energy, Consumer Protection and Government Reform Committee, said the idea that solar could shift the cost burden to other people is “pretty compelling.”
“I can tell you, the utilities are vehemently against this,” Cowles said of third-party ownership. “I’m not sure how we would get them to ever accept that. We would have to overwhelm them somehow. I mean, I’m not taking a position on this right now.”
Neumann, like his dad, is a conspicuous member of the Republican Party. As he emphasizes renewable energy, his party avoids it. The state GOP’s platform, adopted this year, doesn’t prioritize cleaner energy, or even mention it. Instead, the document promotes eliminating the Department of Energy and encourages environmental stewardship based on technology rather than “unnecessary government regulation.”
Neumann’s father, favored by some tea party groups during the primary for governor in 2010, pushed his party to expand its reach with young voters and others “put out from the Republican Party,” by mixing environmentalism into the GOP’s economic messaging. Among the ideas that Mark Neumann introduced in 2010 was a job-friendly plan to reduce carbon emissions.
“When I talk about the environment, that’s an issue people have been afraid to talk about on our side of the aisle,” he said at the time, seated beside future Gov. Scott Walker, a conservative Republican.
Neumann lost badly in the primary several months later as Walker sailed away with a 20-point victory.
For his part, Matt Neumann may stray from his party’s bosom, but he doesn’t abandon it. He looks at environmentalism through a lens of commerce. Pursuing it can enhance economic activity and provide jobs, he seems to say, but it’s unclear if environmentalism is an exclusive priority for him without the fiscal hangers-on.
He also treads carefully when asked about climate change. He declined to say if it’s occurring, something that might perhaps give him credibility when talking to conservatives about renewable energy.
“I don’t know on climate change,” Matt Neumann said. “I have no idea. I would have to study it a lot more — and probably should, given the industry we’re in.”
“I’m being totally honest with you — I just plain don’t know.”
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Utility Proposes Anemic Buyback Rate for New Customer-Sited Bioenergy
Press release issued by RENEW Wisconsin, 8/5/2014
Contained in Milwaukee-based We Energies’ pending rate filing is a proposal to cut the buyback rate for new customer-sited bioenergy projects by more than half, down to 4.24 cents per kilowatt-hour (kWh) beginning in January 2016. The proposed rate would also apply to existing biodigesters once their existing power purchase contracts with We Energies expire.
Currently, We Energies pays about 9.2 cents per kWh for electricity generated from biogas produced from dairy cow manure or food wastes, and that rate remains in effect for the first 10 years of that system’s operation. We Energies’ biogas rate, along with similar rates offered by other utilities, was instrumental in building up bioenergy’s strong presence in Wisconsin. However, We Energies discontinued its special biogas offer several years ago, as have other utilities.
“Biogas generation provides tremendous benefits to Wisconsin,” said Tyler Huebner, RENEW Wisconsin’s Executive Director. “Biogas provides another revenue stream to dairy operations to offset fluctuations in milk prices. It helps Wisconsin keep energy dollars in the state, because we send $16 billion a year out of Wisconsin to pay for energy when we can make more of it here at home. It helps clean up our environment by reducing phosphorous at the source. The list goes on and on.”
According to RENEW Wisconsin, a renewable energy organization intervening in We Energies’ rate case, the 4.24 cents/kWh rate is a key part of We Energies’ ambitious plan to undermine the economics of customer-sited renewable energy systems through a combination of low power purchase prices and onerous charges. The Public Service Commission will review the utility’s proposal and make a decision on it before the end of this year.
“No dairy farm or food processor can make the economics of generating electricity from bioenergy work with such a low rate,” said RENEW Wisconsin executive director Tyler Huebner. “This rate is guaranteed to stifle new bioenergy development in We Energies’ territory.”
“Moreover, dairy operations with existing generating units may have no choice but to discontinue producing electricity when their current contracts with We Energies expire,” Huebner said. “The gas will either be put to a less financially attractive use or simply flared off.”
“There is no compelling rationale for a buyback rate this low,” Huebner said. “Several of We Energies’ power plants, such as Valley and Rothschild, have fuel costs that exceed 4.24 cents/kWh.”
Fuel costs at Rothschild, a new biomass cogeneration plant in central Wisconsin, are averaging over 10 cents/kWh in 2014.
“Even under the 9.2 cents/kWh rate, buying electricity from operations such as Crave Brothers near Waterloo and Clover Hill near Campbellsport is less expensive than generating electricity from that plant,” Huebner said.
“We’re worried that with We Energies’ proposed acquisition of Wisconsin Public Service (WPS), this low-ball rate, if approved, will spread into prime Wisconsin dairying country in 2017. If WPS follows We Energies’ lead, this could put on-farm bioenergy development in a state of permanent contraction.”
Existing bioenergy generation systems interconnected to We Energies include Forest County Potawatomi Digester (Milwaukee, 2,000 kilowatts); Green Valley Dairy (Shawano, 1,200 kW), Crave Bros., (Waterloo, 633 kW); Clover Hill (Cambellsport, 480 kilowatts); and Volm Farms (Addison, 225 kW).
Based on a July 18, 2014 article by Chuck Quirmbach on Wisconsin Public Radio
The Alliance for Solar Choice, a solar industry trade group, has scorned three Wisconsin utility’s attempts to harm solar companies through their respective proposed rate restructuring. All three rate proposals include a planned increase in customer’s fixed charges, while offering a small decrease in the price of energy use per kWh.
The Alliance for Solar Choice represents many members of the rooftop solar industry and believes that We Energies’ (along with WPS and MGE) plan would stop customers from having installers lease them solar panels. Alliance president Bryan Miller believes that utilities are adopting the philosophy of “if you can’t stop it, monopolize it” by assuring that rooftop solar is more economical through the utility. We Energies has also unveiled a solar panel leasing ban, further adding to the calamity felt by solar contractors. The utility waited to propose this ban after the deadline for groups to formally intervene in the rate case before the Public Service Commission, the entity that would review the proposal. According to Miller, “the way they did this shows you really what the character of this company is about.”
We Energies spokesperson Cathy Schultze said her company followed standard procedures for rate cases, stating that “the same amount of time that usually transpires went down in this case.” Further, Schultze stated that the increase in fixed charges is fairer to customers who can’t afford or don’t want solar panels, a surprising statement considering that the 1,450 MW of residential solar installations across the country since 2000 have been overwhelmingly occurring in middle-class neighborhoods that have medium incomes ranging from $40,000 to $90,000 (read the Center of American Progress report here).
Read the entire article here
In an interview with Wisconsin Public Radio, company spokesman Brian Manthey attributes low natural gas prices and orders from a Midwest power supply operator to the plant’s low operation but Michael Vickerman notes that this is only part of the story. Read or listen to Chuck Quirmbach’s story to learn how rate payers are absorbing the costs of the plant’s low operation.
By Chuck Quirmbach
As part of its ‘Power The Future‘ project a few years ago, WE Energies was allowed to build 1,200 megawatts of new coal-fired generating capacity near an existing power plant in Oak Creek. The new plant is called the Elm Road Generating Station. WE Energies concedes the plant only operated about 20 percent of the time last year. Company spokesman Brian Manthey says that’s due to orders from a Midwest power supply operator and low natural gas prices that made it cheaper to boost operation of a gas-fired plant. But Manthey says the Elm Road plant really cranked up when the weather got very hot last summer.
“The two new units actually at times were operating beyond their rated capacity, at a time when there was power needed from every possible source in the Midwest.”
Manthey says with natural gas prices going up this year, he expects the Elm Road plant to run more. He says it’s available to generate power more than 90 percent of the time. But Michael Vickerman, of Renew Wisconsin, says WE Energies rate payers still have to keep paying for Elm Road, and aren’t getting much for their investment.