Sierra Club: Urges PSC to prevent WEC Energy Group from charging customers $138 million in extra costs for coal plants

Contact: Renner Barsella, [email protected], 217-390-9394

Expert Testimony Signals Urgent Need for WEC to shift to Lower-Cost Clean Energy

MADISON, WI — Today, Sierra Club filed direct testimony in WEC Energy Group’s rate case, asserting that WEC is asking customers for $138 million more than is fair and reasonable due to costs associated with the company’s aging coal-fired power plants. WEC Energy Group, which operates as Wisconsin Public Service (WPS) and WEPCO (We Energies), owns all or part of seven coal plants in Wisconsin and the Upper Peninsula of Michigan, all of which are uneconomic to operate.

Sierra Club entered the testimony of two expert witnesses. Economist Paul Chernick concludes that continued operation of WEC’s coal resources is not beneficial to customers, as each plant costs more to operate and maintain than they earn, and other energy and capacity resources are cheaper. For instance, South Oak Creek costs customers approximately $75 million each year. Chernick concludes that “ratepayers should not be charged for the costs of keeping the plants operating unprofitably” and that the Commission should require the Company to demonstrate that it is taking steps needed to retire uneconomic plants. The testimony also states that the extent to which “ratepayers are losing money on the continued operation of the plants,” that “[c]ustomers would be better off with the retirement of the plants, even if they continue to pay for depreciation and return on the sunk costs, just as if the plants were in service.”

Sierra Club also introduced testimony from Scott Hempling, a nationally renowned expert on utility ratemaking, who explained that utilities have an obligation to ratepayers to assess whether it is in the public interest to keep investing in plants that continually lose money. This testimony, which clarified that a utility must always act in the ratepayers interest and that a decades-old decision to build and operate a plant doesn’t relieve the utility of that obligation, directly contradicts WEC’s unfounded claims that these issues are beyond the scope of the current rate case.

In response, Sierra Club Beyond Coal Campaign Deputy Director Elizabeth Katt Reinders released the following statement:

“The central issue in this rate case is that WEC is burdening customers with millions in unnecessary costs by continuing to run uneconomic coal plants when it could be providing power with far cheaper, and cleaner, alternatives. WEC’s coal plants cost more to run than they earn. WEC needs protect its customers. Retiring the South Oak Creek coal plant could save customers $75 million annually if We Energies were to replace it with wind or solar.

“Sierra Club’s testimony shows widespread economic challenges for the state’s largest utility. This is sounding an alarm that the Commission should take seriously. When WEC announced plans to retire the Pleasant Prairie Plant, it conceded these trends, suggesting that retiring the plant while building new solar would bring customers significant savings. Our analysis shows that several other plants – South Oak Creek and Weston- fare even worse than Pleasant Prairie, and that $138 millions more in savings could be realized by phasing out additional coal power plants.

“WEC’s coal plants are dirtying the air, poisoning the water, and wreaking havoc on our climate. Now we know they’re also costing customers millions of dollars that could be avoided with solutions that cost less and safeguard the health of Wisconsin’s residents and environment. WEC needs to address this excessive and wasteful incurrence of costs that these expensive, uneconomic and dirty coal plants are racking up for customers.”