The Sierra Club is objecting to a deal that would freeze electricity rates next year for Madison Gas and Electric customers, saying it locks in a regressive rate structure while allowing MGE to pocket $1.9 million that it owes ratepayers.
The environmental group said Thursday the existing rate structure is “among the worst of the worst nationally” because of its reliance on “fixed” monthly charges, which take away customers’ control over their energy bills.
The utility has proposed raising natural gas prices by 4.1% while holding electricity rates flat next year as part of a settlement negotiated with consumer advocates and UW-Madison. If approved by regulators, it is expected to raise the average household gas bill by about $27 a year.
Sierra Club said the deal “locks in and expands” a rate structure that “benefits the utility and high-use customers at the expense of low-income customers and clean-energy alternatives, and stealthily promotes a utility-centric vision of clean energy at the expense of customer control and empowerment.”
In particular, the environmental group objects to MGE’s $19 fixed monthly charge, the second-highest in Wisconsin, which it says penalizes those who use the least energy and discourages energy conservation or customer-owned generation.
The group noted that under Gov. Scott Walker’s administration regulators allowed utilities to shift more of the cost of service to fixed charges rather than the actual energy customers use.
“These high fixed charges didn’t make sense when they were first approved by the Walker PSC, but they make even less sense from an (Gov. Tony) Evers PSC in a world where colliding crises have revealed Wisconsin’s dramatic social inequities,” Sierra Club volunteer Victoria Gillet said in a statement.
MGE is proposing to use 2019 fuel savings — which normally would be refunded to customers — and to put off collection of some expenses until 2022 to offset the need for an electric rate increase next year.
The Sierra Club said that amounts to a rate increase and warrants more scrutiny from regulators and the public.
“Dumping costs onto future ratepayers’ credit card is no less of a rate increase than charging for them in 2021,” the group argues in a brief.
In recent years the Sierra Club has also scrutinized the economics of Wisconsin’s remaining coal-fired plants, including the Columbia Energy Center, which the Sierra Club estimates lost about $20 million last year. MGE owns 19.1% of the plant.
The Sierra Club said the settlement is “more of the same from a utility that has been slow to respond to the climate crises and a missed opportunity to meet the climate goals set by municipalities and a growing number of community leaders.”
MGE spokesman Steve Schultz defended the agreement and said the utility is working toward its goal of carbon-neutral electricity by investing in large-scale solar farms.
“As everyone continues to battle the COVID-19 pandemic, we believed it was critical to avoid an electric rate increase, while bringing the Badger Hollow and Two Creeks solar projects online,” Schultz said.
The Citizens Utility Board, which represents residential and small businesses customers, the Wisconsin Industrial Energy Group, Renew Wisconsin and UW-Madison signed off on the negotiated settlement. Clean Wisconsin did not sign off on the settlement but does not plan to oppose it.
CUB executive director Tom Content said the settlement keeps overall electricity rates below where they were in 2018 and includes a commitment from MGE to analyze the energy burden for customers hit hardest by the recession and to collaborate on rate structures to help them.
“Taken together, we think these elements of our settlement provide rate stability during the pandemic, plus concrete benefits for MGE customers for 2021,” Content said.
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