Two Wisconsin utility companies — once among the early leaders in promoting solar power — now say the solar industry has grown so much it is hurting their business and their customers.

Madison Gas & Electric (MGE) and We Energies, Milwaukee, are asking state regulators for rate changes that they call a matter of fair treatment for all.

But opponents are kicking up a storm of protest, from local ratepayers to nationwide organizations, claiming the proposed rates would be a slap to customers trying to be energy-efficient and could put solar power into the deep freeze in much of Wisconsin.

“The proposals are designed to do one thing: to stop solar, to stop competition,” said Bryan Miller, president of the Alliance for Solar Choice, a nationwide coalition of rooftop solar energy companies.

As far back as 2000, MGE was advocating green power, installing solar energy panels on the roofs of the Alliant Energy Center’s Arena Building, and the Society of Friends (Quaker) meeting house at 1704 Roberts Court. MGE has touted its solar demonstration projects, from high schools to bike paths to the UW Arboretum. It even decked out a solar-powered trailer in 2008 that still appears at local festivals to showcase solar technology.

But now, the Madison utility wants to make significant changes in its rate structure based, in part, on concerns over the proliferation of solar energy.

MGE’s initial proposal, introduced June 2, would have increased the standard monthly charge for all residential customers from the current $10.50 a month to $22 a month in 2015, $48 in 2016, and $67 by 2017 — not counting the kilowatt-hour cost based on the amount of electricity used.

The new monthly charge would cover operational costs such as billing, customer service and repair crews, as well as a grid charge — the cost of generating power and sending it to the customer’s home, currently figured into the kilowatt-hour charge.

“Those are costs that do not change, no matter how much energy is used,” senior vice president Scott Neitzel said.

Under the proposal, the kilowatt-hour charge would have dropped from 14 cents in the winter to 3 cents, and from 15 cents in the summer to 4.5 cents by 2017.

Jim Lazar, economist and senior adviser for the Regulatory Assistance Project, a global nonprofit focused on energy, called the proposal “the most extreme I have seen anywhere in the world.”

Lazar said the higher standard fee would penalize small users, and the low kilowatt-hour charge would encourage more energy use. “The MGE proposal would severely damage people’s enthusiasm for ... economic conservation measures,” he said.

Based on an agreement reached with the Citizens Utility Board (CUB) in late June, MGE modified the plan, lowering its request for the standard charge to $19 a month next year and removing references to future years, subject to further talks with CUB. Under that agreement, the cost of the electricity used per kilowatt-hour, would inch down from 14 cents to 13 cents in the winter and from 15 cents to 14 cents in the summer.

MGE also wants to pare the credit it provides to customers who contribute their solar power to the electric grid.

But Tyler Huebner, executive director of RENEW Wisconsin, said that doesn’t recognize the benefits of renewable power, a cleaner energy source that avoids the need to build more power plants. “It just doesn’t seem like the direction that this community probably wants to go,” Huebner said.

A nationwide

industry concern

In January 2013, a report by the Edison Electric Institute (EEI) sounded the call to utilities nationwide to beware of “disruptive challenges” ahead that could pose serious threats.

A convergence of factors, including lower costs for solar energy and heightened public interest in renewable technologies, are “potential game changers” for the electric industry, said the 19-page report by the EEI, a group that represents all investor-owned electric companies in the U.S.

“Disruptive forces, if not actively addressed, threaten the viability of old-line exposed industries,” the report said, citing as examples the former photo film giant Kodak and the U.S. Postal Service, dealt big blows by the digital age.

Revising utility rate structures could mitigate some of the problems, the EEI said.

In states such as California, Arizona, South Carolina and Maine, disputes have erupted over solar-related utility rate structure changes.

“I think everybody agrees that the technology around utilities is changing very rapidly,” MGE’s Neitzel said. “As the technology is moving more toward distributed (small, on-site) generation as opposed to central generation, utility rates have to change with that.”

Solar impact still small

Wisconsin is 27th in the nation for solar power capacity, with 17 megawatts’ worth of solar units, enough to power 2,600 homes, according to the Solar Energy Industries Association.

RENEW Wisconsin cites statistics showing Wisconsin has had 1,590 solar power systems installed between 2002 and 2013, based on rebates issued by Focus on Energy. That does not include some large solar arrays, such as the 7,500 panels erected in a field at the Verona campus of electronic health records company Epic Systems Corp.

RENEW estimates 0.02 percent of Wisconsin’s electricity comes from solar energy, based on 2012 data. “Financially, the impact it’s having on utilities is almost imperceptible,” Huebner said.

But that could change. In Germany, for example, at one point on June 9, more than 50 percent of the electricity being produced came from solar generation — a record, the British newspaper The Guardian reported.

There could be a day when rooftops throughout Wisconsin are studded with solar panels, said Kira Loehr, CUB’s acting executive director. “The cost of solar has been steadily and significantly declining, so I can see that as a distinct possibility,” she said, adding that could, indeed, put a dent in sales for the state’s electric companies.

Solar is not the sole potential threat to utility companies, said Steve Kihm, principal and chief economist for the Energy Center of Wisconsin. Some day, consumers may also have small, natural gas turbines in their basements and will need the established electrical grid even less, he said.

In an article in the Energy Law Journal in May, Kihm and co-author Elisabeth Graffy suggested utilities might take a lesson from cable TV companies and offer a one-stop shop of products, such as solar panels, energy storage and standby power.

“Instead of trying to recover costs, if they (utility companies) consider what would add value for the consumer, it would put them in a better strategic position to prepare for whatever is coming,” said Graffy, professor of practice and co-director of energy policy, law and governance at Arizona State University.

MGE’s Neitzel said the Madison utility would like to get into the rooftop solar business. “But because of the way rates are structured, we are at an extreme disadvantage to put those systems in” compared to non-utility providers, he said.

The Madison, Monona, Fitchburg, Middleton and Dane County governments, the UW Board of Regents, and a host of state and national environmental groups have asked for intervenor status, which would allow them or their expert witnesses to participate in hearings on the case before the Wisconsin Public Service Commission.

Local citizens are having their say as well; 90 public comments were submitted last week alone. The PSC's comment period will be open through October 1, 2014.

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Judy Newman is a business reporter for the Wisconsin State Journal.