By Brian E. Clark
WisBusiness.com
MADISON — When Xcel Energy filed for a multi-million rate increase this summer, natural gas cost around $14 a decatherm. Since then, as the economy has tanked, that price has fallen by more than 50 percent.
So when the state’s Public Service Commission took up the utility’s rate request Thursday, it decided Xcel’s rates would not increase in 2009.
The ruling was part of an agreement reached by Xcel, the Wisconsin Industrial Energy Group, which represents major manufacturers; and the Citizens Utility Board, representing consumers.
“As the economy has slowed, the price of natural gas has dramatically decreased,” said Brian Elwood, a spokesman for Xcel. “It’s almost like what has happened with gasoline.”
Todd Stuart, executive director of the industrial group, praised the PSC decision, which affects Xcel customers in northwest Wisconsin.
“Well, any time you have a zero rate increase it is a good thing,” he said.
“But you have to put matters into context. This is a short-term victory … a function of rapidly declining fuel price from the slumping economy.
“So this is good news for rates in the short-term, but long-term ratepayers still have concerns over major costs and extreme rate pressure. We are likely to see double-digit rate increase requests in the next utility rate cases because of new power plants, transmission lines, renewable requirements and environmental rules.”
Charlie Higley, executive director of CUB, said he, too, was pleased with the PSC decision.
“Rates have been increasing faster than inflation since 1997,” he said. “So it’s great to not have an increase in this case for 2009.”
Xcel officials said even though an existing fuel surcharge charge of $2.34 for the average residential customer is being rolled over into 2009, rates will not go up in January because of the agreement reached between consumer groups, the PSC and Xcel.
Under typical regulatory procedures, base electric rates would have increased by a greater amount in January due to the higher generation and transmission costs for the new year, they said.
But a few months later, customers would have received a credit due to declining costs for fuel and purchased power.
“This collaborative agreement reflects the current realities of volatile fuel and purchased power costs and is a good solution for all parties,” said Don Reck, director, Regulatory and Government Affairs.
Wisconsin Public Service Corp., which serves northern Wisconsin and the Upper Peninsula of Michigan, was on Thursday’s agenda with a rate case that once had an even larger proposed increase.
But that decision was pushed back to a later date. When it is decided, it should also mean no rate increase for 2009, said Stuart of the Wisconsin Industrial Energy Group.
