POLITICS

Wisconsin lawmakers want to rein in utility profits

Patrick Marley
Milwaukee Journal Sentinel

MADISON - Republican lawmakers rolled out legislation Thursday to rein in profits that the state’s largest utility makes from its power plants in Oak Creek and Port Washington.

"Today, we put ratepayers first," said Sen. Duey Stroebel (R-Saukville) at a Capitol news conference.

But a spokesman for We Energies said the measure was unconstitutional.

The bill seeks to undo a key aspect of negotiations and legislation that followed electricity shortages the state experienced in the late 1990s. Wisconsin Energy Corp., the parent company of We Energies, responded to the crisis by announcing plans to build coal and natural gas-fired power plants in Oak Creek and Port Washington.

A key aspect of financing the projects was to have a 12.7% return to be earned from investing in the projects to be set in stone for 25 to 30 years. The company earns 12.7% on $3 billion it has invested in the project.

The bill would allow the Public Service Commission to review the rates for those plants, giving the regulatory agency a chance to lower them.

If the bill is adopted, it could affect profits earned by We Energies and Madison Gas & Electric, a co-owner of the Oak Creek plant, as well as WPPI Energy of Sun Prairie, another co-owner.

Sponsoring the bill are Stroebel, Sen. Rob Cowles (R-Allouez), Rep. Jim Ott (R-Mequon) and Rep. Adam Neylon (R-Pewaukee). They said allowing the plants to be subjected to the same reviews as others would help lower rates for manufacturers and homeowners.

"It will end the regulatory favoritism that exists in the current system," Stroebel said. "No utility should be able to shield a portion of its operations from the oversight of the PSC."

But We Energies spokesman Brian Manthey said the bill would interfere with power-generating contracts that are already in place.

"The bill is legally flawed," Manthey said. "It violates the Wisconsin and U.S. constitutions by impairing our existing contracts."

Wisconsin has the highest residential electric rates in the Midwest and within Wisconsin, MG&E and We Energies have the highest rates among the state's investor-owned utilities.

When it approved the Oak Creek project in 2003, the PSC signed off on the 12.7% return citing the critical need for the coal plants in response to power shortages.

Nearly 15 years after the Oak Creek and Port Washington plants were approved, Wisconsin has more power supply available than customers need, and cost pressures and low-interest rates have led regulators around the country to scale back on utility profits.