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Xcels high fixed fee promotes waste, needless high-interest debt
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Xcel Energy has proposed a $10, fixed electric fee increase “driven primarily by capital investments.”   For 2015 through 2019, Xcel projects debt on existing and new power plants, transmission lines and distribution lines to exceed 1.4 billion.

Under Xcel’s rate scheme, electricity for a family that currently pays from $20 to $60 per month would cost 10-30% more.  Coupled with a slight decrease in the unit price of energy, customers who consume twice as much as the average household would be rewarded for the excess.

According to the Citizens Utility Board (CUB) and the Wisconsin Industrial Energy Group (WIEG), the debt and other costs outlined by Xcel could be met by simply raising the cost of energy less than one-fifth of one cent per kWh—about three cents a day for the average residence.

Xcel is using this rate case to confuse billing, protect their past and future capital assets and make it harder for customers to manage their power use. It’s worth our time to understand how and why this is unfolding.

Before 1998, Wisconsin energy law required a competitive energy market. Utilities had to demonstrate that money for new power plants and transmission lines was not better spent on energy efficiency, load management, solar or conservation awareness. States with a competitive market now allow their electric customers to spend $2-$4 per month on improvements to their homes, farms and businesses-- a cost repaid several times in energy savings, avoided power plants and transmission.

Currently restricted to $1 per month towards energy efficiency and solar, Wisconsin households face charges for a record number of new power plants and transmission lines totaling $40-$60 per month. Beginning in the late 1990’s, the spending spree is fueled by a 10.2% guaranteed return on utility capital spending.  Payments for utility capital are stretched over 30 to 40 years; no tax dollars are involved.

Let’s find these charges for debt on your bill. The facility maintenance fee that Xcel wants to boost from $8 to $18 per month, was created to pay for local “lines, poles and services.”  Rural electric coops have many miles of distribution lines to maintain so their fees are considerably higher than those for cities and villages.  Often, upkeep costs for lines and poles can be kept under control by targeting energy efficiency, solar and load management instead of new construction and high interest debt. Vernon Electric Co-op’s community solar farm near Westby is prolonging the life of a substation with solar panels purchased by members snapped up in two weeks. Solutions like these are poised to blossom.

The charges on your bill for outlying power plants and transmission are built-into the price paid per unit of energy shown as cents per “kWh.” Years ago, this charge was primarily for fuel costs but increasing sums are going to power plants and transmission lines that are failing to produce savings that utilities promise.

Key in these losses is Wisconsin’s flat and declining energy use mainly from higher federal energy efficiency standards on appliances since 2007. When the Wisconsin Public Service Commission approves a new power plant or transmission line, future payments expected from ratepayers are based on energy use projections. Projections provided by utilities have been consistently exaggerated. From 2007 to 2014, Wisconsin purchased about 40% less power than utilities predicted which caused payments on loans to seriously lag.

Pressure from debt is the main reason our electricity rates have bulged. Twelve years ago, Wisconsin’s rates were below the U.S. average, but today only seven states have faster rising electric rates. Since 2003 while annual inflation was 2%, our rates have marched up 4.5% per year.

Rate increases are tracked by the U.S. Department of Energy to gauge competition and utility performance, but fee charges are not. Using large fee increases to mask poor energy planning and capital over spending sweeps past harm and opportunity to learn from utility mistakes under the rug.  Equally at stake is the next utility gold rush: the outright replacement of aging distribution lines opposed to prolonging their lifespan with targeted energy efficiency and community solar. Questionable capital purchases are easily hidden in large monthly fees and lesser exposed to cheaper alternatives that lower bills and keep dollars in our local economies.

In truth, heavier energy users place greater demand on the grid and new capital expense.  Forcing electric customers to pay for debt through high fees and lower rates both encourages waste and obliterates our ability to minimize market costs. The fairest way to meet payments for utility capital is the time-tested path: simply increase the price paid of each unit of energy very modestly as CUB and WIEG have proposed.

Xcel is overreacting. No one is suggesting that electric customers should shirk their obligation to pay utility debt. What I do hear are calls to restore a competitive, un-monopolized energy market.  When we manage use by increasing efficiency and local energy production, we respect our selves, our local economies and the extremely precious resource we call electric power.

One can comment to the PSC about Xcel’s fee increase request online: