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Wisconsin regulators approve COVID-19 pandemic cost recovery for investor-owned utilities
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Wisconsin regulators approve COVID-19 pandemic cost recovery for investor-owned utilities

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Wisconsin utilities will be able to recover some expenses incurred as a result of the COVID-19 coronavirus health crisis, but with a lower rate of return than they had sought.

The Public Service Commission voted Thursday to allow investor-owned utilities to track and defer expenses and lost revenues related to maintaining service under health emergency orders, which prevent them from shutting off service or collecting late fees.

The PSC split on the rate of interest on that money, with the majority favoring short-term borrowing costs, which range from 2.7% to 3.4% depending on the utility.

Commissioner Ellen Nowak supported a higher return that the utilities had sought, arguing that the commission needs to balance earlier actions designed to protect consumers.

“What we’re doing right now ... is asking utilities to potentially be a bank for a very large amount of debt for an extended period of time — doing this while providing an essential service,” Nowak said. “It is our job to make sure that we keep a financially healthy environment here.”

The other two commissioners, both appointed by Gov. Tony Evers, argued that utilities are likely to turn to short-term lending markets and that the PSC could adjust the rate of return before any future rate cases.

“In the current environment a lot of non-regulated businesses would be thrilled to have the ability to defer their expenses,” said Chair Rebecca Valcq. “We’re not locked in ... we can always adjust that rate.”

The PSC later issued a news release saying its actions “will maintain reliable and affordable utility services and protect consumers from future unreasonable rate increases.”

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The commission did not extend the recovery to revenues lost to declining sales.

The U.S. Energy Information Administration projects electricity sales will fall 3% in 2020 as a result of stay-at-home orders and the economic slowdown, but commissioners said there are still too many variables to consider a mechanism for recovering those losses.

The commission also rejected calls from consumer advocates to require utilities to use potential savings, including tax provisions in the federal CARES Act, to offset expenses.

Valcq bristled at the idea that utilities are profiting from the crisis or that authorized profit margins are guaranteed.

“We give them the goal. It is up to them to manage their expenses if they want to meet that goal,” Valcq said. “Our job is to protect the public while ensuring the financial health of utilities. If we put that financial state into a precarious position, then none of us are going to have power or heat.”

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