We Energies Wants More of Your Money

Oak Creek Power Plant. Photo taken November 13, 2021 by Dave Reid.

The closer you look at We Energies‘ latest rate requests the more outrageous they look.

The Milwaukee-based utility is asking the Public Service Commission (PSC)  to raise its rates for electricity by 6.9% in 2025 and 4.8% in 2026. That’s an 11.7% increase over two years.

But it gets worse. That increase will come on top of two rate hikes in 2023 and 2024 that together increased the average bill by 11.5%. Meaning customers will be paying nearly 25% more than in 2026 they were in 2022.

But it gets still worse. Those are only the average price hikes, with business customers getting less of the increase. For the average residential customer, the monthly bill, according to We Energies own calculations, will rise from $128 today to $140 in 2025 and $152 in 2026. That’s an increase of $24 a month or $288 per year.

Can that get any worse? Yes, if you take the longer view. Since 2005, the Citizens Utility Board (CUB) estimates, the average monthly bill for We Energies residential customers has jumped from $57.59 to $127.29, an increase of 120%.

Had the average bill increased by the rate of inflation over that period, it would now be under $95 per month.

Instead, if We Energies has its way, the average monthly bill for customers will have risen from less than $58 a month in 2005 to $152 in 2026. Their annual bill will have risen by $1,128 over that period. That’s astounding.

And even that’s not the end of the merry-go-round of increased costs. We Energies has announced plans to spend $2.1 billion on capital improvements to increase natural gas power, with most of that for converting its Oak Creek operation from a coal-fired to natural gas plant. If the PSC approves all this spending that will require more rate increases in 2027 and beyond to repay the costs.

But those costs aren’t the only thing driving the company’s requests for ever higher rates. They also pay for its rising profits, executive salaries and return to stockholders.

The company’s allowed profit margin by the PSC is 9.8%, down from higher than 10% in past years. That’s helped to drive lovely returns on its stock. CUB presents a revealing table showing an investment in the stock of We Energies parent company, WEC Energy Group, over the past two decades would have risen in value at a rate more than double that of a utilities stock fund and by some 45% more than an investment in an S&P 500 index fund.

The company itself brags that “We consistently deliver among the best total returns in the industry,” including an annual average shareholder return of 15.1% from 2002 to 2017, its website has noted. Keep in mind these incredible returns are for a low-risk investment in a public monopoly that can keep raising rates with no fear of a lower-cost competitor.

Its CEO Scott Lauber was paid nearly $9.6 million in total compensation in 2023 and $8.1 million in 2022, annual reports by the AFL-CIO have shown. Nor was he the company’s only millionaire. From 2017 to 2022, WEC could afford to pay its top four executives $98.9 million, according to an analysis by the Energy and Policy Institute. In 2023, according to salary.com WEC paid its top five executives a combined $27.5 million.

All of which ultimately gets passed on to the ratepayers. CUB and the Wisconsin Industrial Energy Group (WIEG) have found that Wisconsin’s electricity rates are much higher than both the Midwest and national average. But We Energies has by far the highest rates, WIEG found, the third highest rates of any of 50 investor-owned utilities in the Midwest.

Brendan Conway, a spokesperson for We Energies, counters that the key statistic is not the average cost per kilowatt but average electric bill and in that regard We Energies is below the national average. But as a northern state with lower use of air conditioning, you would expect the average bills to be lower here.

Beyond all this is the question of whether it’s even a good idea for We Energies to spend $2.1 billion on more gas power. The Clean Economy Coalition of Wisconsin, a group of climate, energy, environmental justice and conservation organizations and businesses and allies, notes that methane, the primary component of natural gas, is “a potent greenhouse gas… with over 80 times the warming power of carbon dioxide.”

Conway doesn’t deny that gas plants pollute, but argues that the proposed facilities “are an important step to ensure reliability for our customers during the transition to a cleaner energy future in Wisconsin. It is critical to have quick-start gas plants available for those times when zero-carbon generation cannot meet customers’ energy needs.”

But the coalition contends that further investments in renewable energy will meet this need. “These expensive, new fossil fuel projects do not make sense in today’s 21st-century economy, as they will likely be retired before the end of their economic lifespan. Cleaner alternatives are already more cost-effective.”

Critics charge that We Energies doesn’t look for the cheapest way to generate power because more spending gets charged up at a profit, which can then be passed on to ratepayers. When you are a monopoly, that’s how you maximize your returns.