Madison Gas and Electric customers will pay slightly more for the electricity they use next year under a plan approved by regulators. But in a win for consumer advocates, the utility will lower the flat monthly fees that disproportionately affect those who use the least energy.
In split votes, the Public Service Commission agreed Tuesday to approve a deal negotiated between MGE, consumer and environmental organizations and UW-Madison.
The average residential customer will pay about $7.50 more per month for electricity and gas service next year, according to PSC estimates.
The new rates represent an increase of about 5.2% to electricity base revenues and 2.2% for gas, driven by the utility’s investments in an Iowa County solar farm, new billing software and improvements to the gas distribution system.
Fuel costs are expected to increase by about $15 million.
Savings from the 2017 federal tax cuts, which had been used to offset spending increases in recent years, have been exhausted, though the utility agreed to trim operating expenses by about $1.1 million.
“It’s still a strong settlement,” said CUB executive director Tom Content, who noted that in spite of soaring natural gas prices the utility agreed to contain some of the costs within its control.
Regulators split on the utility’s plans to reduce the flat monthly fees charged to all residential customers.
MGE agreed to trim the monthly residential customer fee for electricity service by $2 in each of the next two years, bringing it to $15 in 2023, the lowest since regulators approved an 82% increase in 2014.
Commissioner Ellen Nowak opposed the reduction in customer fees for electricity, while Commissioner Tyler Huebner opposed plans to maintain the $21.88 monthly fee for gas service, arguing it should be lower.
Wisconsin law requires a permit to build a large power plant. The standards are different depending on who’s building it.
The move brings MGE’s fixed electricity charges in line with Alliant Energy’s, currently the lowest among the state’s largest for-profit utilities. Last week regulators authorized Xcel Energy to reduce its monthly fees from $17 to $15 in 2023.
The national average residential monthly fee is around $13, according to an analysis of OpenEI’s utility rate database.
While the Citizens Utility Board considered the reduction “a big step forward,” the Sierra Club argued it didn’t go far enough to reverse policy decisions made in the mid-2010s, when the PSC allowed utilities to double or even triple flat fees.
The PSC last week approved rate hikes for Alliant Energy and Xcel Energy.
The typical Alliant customer will pay about $14 more per month for electricity and gas next year, while Xcel customers will see their combined monthly bills go up about $10.26.
We Energies and Wisconsin Public Service Corp. have sought a one-year rate freeze.