Reform Needed To Lower Electric Rates
Rates are 32% higher than neighborhood states. Proposed bill addresses this.
In 2016, southeast Wisconsin’s average industrial electric rate was 8.36 cents per kilowatt hour. By comparison, the Midwest average last year was 6.31 cents per kilowatt hour. That means southeast Wisconsin industrial electric consumers — our employers — pay rates that are 32.5% higher than their average Midwest peers.
Residential ratepayers also pay the price of high electricity costs. The average residential ratepayer in southeast Wisconsin paid 14.64 cents per kilowatt hour last year, a rate 21.4% higher than Midwest average residential electric rate.
In August of 2016, Todd Stuart of the Wisconsin Industrial Energy Group and Jeff Landin of the Wisconsin Paper Council wrote in a commentary, “Wisconsin’s industrial rates increased 78% from 2001 to 2015, which far outpaced increases elsewhere in the Midwest, the U.S. and the rate of inflation.”
Last year, a large manufacturer stated that high electric rates were forcing it to consider expanding its operations outside of Wisconsin. Earlier this year, the company announced it is investing $150 million to build a new facility in Ohio. This story is not unique, nor is it a problem faced only by large employers.
Wisconsin can no longer afford these high rates. They are threatening our job creators, driving investment out of our state, and costing hardworking families real money. That’s why I’m fighting in Madison to end a special provision in state law that exempts some large electric power generation contracts from Public Service Commission oversight.
The Public Service Commission is tasked with regulating utilities and ensuring that utility rates are fair and reasonable. It plays a vital role in our state by balancing the needs of investors with the needs of ratepayers to ensure access to affordable electricity, natural gas, water and telecommunications services.
Unfortunately, in 2001 the state Legislature took away from the PSC the power to review certain large electric generation contracts once they were established. Under state law, the PSC has the power to exercise oversight over all utility contracts and to consider the consequences of those contracts in rate cases. By forcing the PSC to pretend these contracts don’t exist, the Legislature curtailed the PSC’s ability to serve the public interest and fulfill its mission.
Tilting the regulatory playing field in favor of one party over another is not good government. For the public to have confidence in government, it must know that all will be treated equally under the law.
The assertion by some that the ratepayers first proposal is an unconstitutional impairment of contracts is untrue and a tactic to short-circuit consideration. In 1983, the Supreme Court ruled unanimously, in Energy Reserves Group vs. Kansas P. & L. Co., that Kansas did not violate the contracts clause when it imposed rate caps that nullified portions of prior contracts. Wisconsin has the power to protect ratepayers. Will we?
Our president ran on a platform of “draining the swamp” and “tearing up bad deals.” Unfortunately, these Power the Future contracts exhibit both problems. Lobbyists — led by the power utilities — have descended on your state Capitol in a coordinated effort to kill this bill. It is time for politicians to put Wisconsin ratepayers first.
District 20 State Sen. Duey Stroebel (R-Saukville) was elected in 2015 and previously served in the state Assembly since 2011.
This column originally ran in the Milwaukee Journal Sentinel.