Big industries say high electric prices may push them out of wisconsin madison wisconsin business news host.madison.com arkansas gas prices

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Wisconsin’s average electric rates are highest among eight Midwest states for the first time since 2006, according to the SEA, at 10.97 cents per kilowatt-hour. The other states’ average rates range from 8.65 cents in Iowa to 10.87 cents in Michigan. The U.S. average is 11.02 cents per kilowatt-hour, the report says.

Charter Steel, in written comments to the PSC, said other than scrap metal, whose price changes can be passed along to customers, electricity is its highest expense, “exceeding labor costs” at its Saukville steel melting operations where 700 people are employed.

The Wisconsin Industrial Energy Group, representing more than 30 of the state’s largest companies, and the Wisconsin Paper Council submitted a joint, 18-page statement contending that electricity is not available to industries “at reasonable prices” in Wisconsin compared to other states.

“It is particularly troubling to note in a state whose economy is built on manufacturing that in 2015, not only did Wisconsin have the highest average industrial rate when compared to surrounding states, the Midwest and U.S. averages respectively, but the growth rate from 2001 to 2015 was the highest as well,” the groups said.

Bob Venable, president and chief operating officer of Charter Manufacturing, Charter Steel’s parent company, said We Energies, the Milwaukee utility company that provides power to the Saukville steel mill, charges 25 percent more than the average regional and national industrial rates. “And the difference is significantly larger when compared with our rates in Illinois and Ohio,” where Charter also has operations, he said.

“We are not considering moving — we have a very large investment in our Wisconsin operations and are committed to Wisconsin. That said, the non-competitive cost of electricity in the We Energies’ service territory is a key reason we are looking to expand outside of Wisconsin for future growth projects,” Venable said, in an email exchange with the State Journal.

In its comments to the PSC, Charter said most of the blame for We Energies’ high rates was its “massive level of excess electric generating capacity” created when it added two units to the coal-fired Oak Creek power plant in 2010 and 2011, adding 1,230 megawatts of power, as the main element of its Power the Future plan.

“As you’ll recall, the risk of blackouts because of power deficiencies was all too real for all of our customers a number of years ago. In response, we launched Power the Future to make sure we could keep businesses open and the lights on,” Manthey said.

Manthey said We Energies has worked closely with its industrial customers to help lower their energy costs. That includes getting PSC approval for large companies to pay wholesale market prices for power tied to factory and production expansions.

The Wisconsin Industrial Energy Group and the Wisconsin Paper Council point the finger at high transmission costs from MISO and ATC. MISO, the Midcontinent Independent System Operator, governs the movement of electricity across parts of 15 states and the Canadian province of Manitoba while ATC, American Transmission Co., operates transmission lines in much of Wisconsin and parts of Illinois, Minnesota and Michigan.

“Competitive electricity retail choice is operating fully and well” in 13 states and the District of Columbia, “accounting for one-third of all electricity consumption in the United States,” said the Illinois Energy Professionals Association, in its written comments to the PSC.

When Illinois adopted customer choice in 1997, its average industrial price was 42.2 percent higher than Wisconsin’s; by 2015, Wisconsin’s average industrial cost was 22.4 percent higher than in Illinois, the association said. “This represents a massive, policy-driven change,” the group contended.

“RESA maintains that competition in electricity markets fosters innovation, clean energy solutions, jobs and competitive rates, and enables customers to shop for innovative energy management solutions and helps lower costs and preserve jobs,” the Hummelstown, Pennsylvania organization said, in its comments.

In approving the Strategic Energy Assessment, the three-member PSC did not comment on the prospect of reopening a discussion of electric deregulation. The issue has not come to the forefront here for years. The PSC opened a docket on deregulation in 1994 and closed it in 2000.

“Deregulation is a very minor element in electric rates and mainly benefits the very largest commercial users, not the average small business or residential user,” said Nathan Franklin, government relations spokesman for Dairyland Power Cooperative, La Crosse.

“The PSC has addressed deregulation in the past and found it wasn’t right for Wisconsin then, and it isn’t right for Wisconsin now,” said Franklin, chair of the Customers First! Coalition, formed in the 1990s to fight the issue. The organization represents Madison Gas & Electric, municipal utilities, small business, environmental and low-income groups.

Huebner said the problem with retail choice is that if some customers choose to switch away from a Wisconsin utility company, the remaining customers will face higher charges. “It’s likely that the cost the utility has incurred won’t change. So they’re going to spread those costs over fewer customers,” he said.

“The pros and cons of retail choice are speculative at best given the unique nature of each state’s utilities, customers, load, etc. A number of states have suspended or rescinded so-called ‘retail choice’ and moved back to the traditional regulatory model,” Nelson said.