Environmental advocates are challenging a pair of decisions by utility regulators they say are bad for consumers and the climate.
In a lawsuit filed in Dane County Circuit Court, the Sierra Club and Vote Solar are asking the court to review the Public Service Commission’s recent approval of Madison Gas and Electric rates.
The groups say fixed charges — the minimum monthly fee every customer pays to have an account — included in the two-year rates authorized in November, are illegal and discriminatory.
In an agreement negotiated with consumer and environmental advocates, MGE agreed to shave $2 off its $17 fixed electricity charge, which was among the highest in the state.
But the Sierra Club argues the fee — along with a $21.88 monthly fee for gas service — discourage conservation and customer-owned solar panels, in violation of state law that prioritizes energy efficiency and renewable energy.
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The complaint alleges the approved charges are roughly double the basic costs they are intended to cover, such as metering, billing and the cost of the wires and pipes that connect each customer to the system.
It argues the commission expanded the scope of fixed charges “through a series of ad hoc orders” between 2012 and 2014 rather than following the prescribed rulemaking process for such policy decisions.
Judge William Conley’s ruling throws the fate of the Cardinal-Hickory Creek transmission line into question just months after utilities began construction on the $492 million project.
The groups say the harm is not theoretical: high fixed charges create a greater burden for those who use the least energy, customers who are lower-income, non-white, and older, on average, already face many social and economic inequities.
By setting a relatively high fixed charge and lower consumption-based rates, the complaint says the commission’s decision “reduces the ability of customers to control their bills, lowers incentives to undertake conservation and efficiency, lowers incentives to self-generating energy with rooftop solar panels, and imposes higher relative bills for low use customers.”
A PSC spokesperson said the agency does not comment on pending litigation.
The commission ordered MGE to submit an analysis of how it allocates basic customer costs, which could result in future reductions, but the Sierra Club argues customers will continue paying higher rates for the next two years.
The settlement will bring MGE’s fixed electricity charges in line with the state’s other largest for-profit utilities, though still higher than the $13 national average, according to an analysis of OpenEI’s utility rate database.
In a statement, MGE noted the PSC-approved rates were negotiated with consumer advocates and environmental groups including the Sierra Club, though the club objected to the final agreement.
“We are sensitive to any rate impacts on customers, which is why we continue to work hard to contain costs,” spokesperson Kaya Freiman said. “We appreciate the PSCW’s work to carefully review and approve the terms of the agreement consistent with the law.”
The Citizens Utility Board, which has long fought for lower fixed charges, called the settlement “a big step forward.”
“We see the reduced fixed charge as a clear win in the settlement,” said executive director Tom Content. “The settlement is a significant milestone that CUB members have been concerned about for almost a decade.”
The Sierra Club and Vote Solar filed a similar lawsuit last year challenging a one-year rate freeze on the grounds that it perpetuated the fixed charge. Judge Jacob Frost put that case on hold in September pending the PSC’s decision on the current rate settlement.
David Bender, an attorney representing the Sierra Club, said the groups will seek to have the two cases consolidated.
A draft environmental review released last month has drawn criticism from individuals, tribal governments and environmental advocates who have delivered more than 1,300 signatures opposing the pipeline.
The Sierra Club has also asked the Commission to reconsider its approval of a $370 million natural gas storage project in southeastern Wisconsin designed to provide fuel when demand peaks.
The group faulted the commission’s agreement with WEC Energy Group’s load forecast and assessment that it won’t be able to meet customer demands without the storage facilities in Jefferson and Walworth counties.
According to the Sierra Club, WEC’s growth projections are inconsistent with the 17% reduction in gas use that would be required to meet Gov. Tony Evers’ commitments to emissions targets set by the Paris Climate Agreement and the United States Climate Alliance.
“To the extent the Commission concludes that Wisconsin is unlikely to meet the Governor’s commitments, it should say so explicitly and provide the evidentiary basis for that conclusion,” the petition states.
The petition says WEC’s forecast “double counted” growth from commercial and industrial customers and inflated projections associated with Foxconn’s ever-changing plans for a manufacturing campus in southeast Wisconsin.
It also argues the commission’s decision contained other legal errors, including putting the burden of proof on opponents to show the feasibility of alternatives.
“Intervenors do not have the burden of proof in cases seeking certificates of authority,” the petition states. “The applicants do.”
WEC filed a response Wednesday calling the petition “legally and factually deficient” and alleging the Sierra Club’s fundamental opposition to gas led it to ignore evidence supporting the project.
“Sierra Club may be warmed by its strongly held beliefs, but (WEC) customers need a reliable supply of natural gas to stay warm when the temperature dips,” the utility wrote.
A PSC spokesperson declined to comment on the petition.
The project consists of two storage facilities in Ixonia and Bluff Creek that could each hold up to a billion cubic feet of chilled natural gas for times of high demand, when it would be heated and vaporized.
The utilities say the facility will eliminate the need to contract additional pipeline capacity that would only be needed a few days a year or to pay a premium when demand is high, as it was during a cold snap last winter that caused spot prices to soar.
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