Utility, big customer at odds over rates, power plants

“We Energies is 25% higher than the other major Wisconsin utilities with their industrial rates, and 25% higher than the national average for industrial rates,” Bob Venable, president of Charter Steel in Saukville, said in an interview.

For a steelmaking operation that’s in a tough industry beset by growing imports, Venable said he finds it hard to continue to absorb rates that in his words “are not competitive.”

We Energies disputes Venable’s percentages, but there is no question the utility’s rates have risen at rates higher than those of many other nearby utilities, for two reasons:

■Facing a real threat of blackouts because of power shortages in the late 1990s, the utility embarked on a multibillion-dollar power plant expansion plan to make sure the region’s lights stay on. Electricity magnetism and electromagnetic theory pdf It has worked — the company has been named the most reliable utility in the Midwest five years in a row.

■At about the same time as it was completing the biggest construction project in state history, the building of the massive coal-fired Oak Creek power facility, the Great Recession hit — vastly reducing the need for the new plant’s power and leaving the state awash in electricity.

Because the building program included a guaranteed, fixed profit margin of 12.7% for We Energies that can’t be adjusted for decades, the glut meant rates for the electricity We Energies sells had to rise.

Citing overall rates rather than industrial rates, We Energies CEO Gale Klappa said in an interview Friday that his utility’s rates are about 11% above the national average.

Also, utility financing trends play out over decades, he said, and Wisconsin and We Energies were ahead of other states in complying with EPA pollution rules to add scrubbers at coal plants.

In addition, because of the impact of the Great Recession on power sales, We Energies has created special rate packages that Charter and other businesses are taking advantage of to help mitigate rate increases, according to Klappa and Allen Leverett, who will become CEO when Klappa retires in May.

About 61 customers are on the special rates, which allow them to pay wholesale market prices for any power associated with factory expansions and increases in energy use. Grade 9 electricity test and answers Those companies have created 1,400 jobs, Klappa said.

Charter saw its price per kilowatt-hour fall 12% since 2014 and could see it fall another 5% next year based on one proposed change We Energies has discussed with the company, Leverett said.

Venable disputes whether Charter will see the savings next year, but to him the most important point is that customers here are continuing to pay for a power system that has grown far bigger than it needs to be.

An analysis by We Energies last fall concluded that for the year 2016, the Milwaukee utility has 32% more power supply available than its customers are expected to use. E 87 gasoline That’s well above the 14% cushion that the State of Wisconsin and the regional grid operator want utilities to have on hand.

We Energies wouldn’t need to add any additional power plants before 2030, the analysis found. Power outage houston report When combining We Energies with its new sister company, Wisconsin Public Service Corp., no new plants would be needed until 2025, it found.

“They have massive excess capacity and all their customers are paying more than they should due to that excess capacity,” Venable said. 3 gas laws “And that’s kind of the foundational issue: Everyone’s paying more. 76 gas station hours Is our (special) rate better than the average industrial rate? Yes. K gas oroville But it still could be a lot better if they didn’t have so much capacity.”

He made it clear he’s not threatening the loss of the 650 jobs in Saukville but says it’s time for the state to respond to a monopoly utility system that isn’t functioning well. Gas efficient suv 2010 It’s harder to persuade his parent company, Charter Manufacturing in Mequon, to invest here when the company finds a much more favorable utility climate in other states where it operates, such as Illinois and Ohio, he said.

Venable is comparing Wisconsin, which has a regulated monopoly utility structure, with states that have opened up their power markets to competition. Gas city indiana post office He said he isn’t seeking outright deregulation, but he wants the state to function in place of the market to address a glut that doesn’t look to be remedied anytime soon.

Klappa, though, said Charter was a “vocal and ardent supporter” of the need to build power plants to improve reliability after Wisconsin ran into power shortages in the late 1990s.

Also, the plants We Energies has built are critical when electricity demand spikes, Klappa said. E gaskell north and south Both the natural gas-fueled plant in Port Washington and the Oak Creek coal plant are playing a critical role when the Midwest grid is strained, such as during an extreme heat wave in 2011 and during the “polar vortex” cold snap in January 2014, Klappa said.

In proceedings at the Public Service Commission, Charter has voiced its displeasure about rate trends and asked regulators to reconsider the 12.7% fixed profit rate that We Energies is earning on its investment in the $2.3 billion coal plant in Oak Creek.

In a ranking of 49 Midwest investor-owned utilities’ industrial rates in 2015, Brubaker & Associates found We Energies ranked fifth-highest. Electricity video ks1 A separate 2015 report by the Metropolitan Milwaukee Association of Commerce found We Energies’ rates were fifth-highest compared with 20 other metro areas.

We Energies counters that its special industrial rate positions its factory customers at rates below the national average. Wireless electricity how it works That rate is so popular that the utility will need to ask regulators soon to allow more customers to participate, Leverett said.

On average, rates for customers of investor-owned utilities in Wisconsin between 2014 and 2017 are projected to rise at a slower annual clip, 4.2%, than most other states, the utility says, citing research by AllianceBernstein. Zyklon b gas effects That compares with 4.9% growth in rates in Ohio, Minnesota and Michigan, and a 4.1% increase in Illinois.

“High electric rates are a heavy tax on Wisconsin’s industries, and we really need to have our commission, utilities and Legislature as partners in this effort,” said Todd Stuart of the Wisconsin Industrial Energy Group, which advocates for Charter and other big factories. Electricity history united states “If you want to move the needle on economic development and jobs, getting rates under control should be at the top of the list.”