Sierra Club and Vote Solar have filed a lawsuit with the Public Service Commission of Wisconsin over regulators’ approval of a rate settlement agreement between utility Madison Gas and Electric and intervenors, claiming that the utility’s monthly fixed charge imposes unnecessary costs on low-income customers and discourages investments in energy efficiency and rooftop solar.
The lawsuit also alleges that the charge violates Wisconsin’s landmark Energy Priorities Law, which requires maximizing energy conservation, efficiency, and solar generation.
“Wisconsin’s highest-in-the-Midwest fixed charges discourage conservation and local, clean energy investment,” said Vote Solar’s Midwest Regulatory Director, Will Kenworthy.
Fixed charges are not new and have long been a point of contention between utilities and residential solar advocates, who argue that the fixed rate undermines the bill savings that solar customers are trying to achieve. The rates also may add time to solar system payback periods, further hampering customers’ efforts to save money.
The lawsuit also asserts that the charge is discriminatory towards low-use customers and those on fixed incomes, especially retirees and customers living in smaller homes and apartments.
“We’ve all seen that the climate crisis and undeniable economic disparities require us to reevaluate our systems and how we operate our society,” said Sierra Club Wisconsin Chapter Director, Elizabeth Ward. “MGE’s inequitable rates undermine the progress we need.”
In addition to alleged discrimination, the lawsuit also calls out the Wisconsin Public Service Commission’s decision not to hold a hearing before allowing MGE to recover more than $20 million it over-collected. The lawsuit argues that these funds, which were gathered through customers’ bills, are owed to those customers.
Fixed charges have been a point of contention previously in the state. In 2016, regulators approved Wisconsin Power and Light’s proposal to raise the utility’s fixed charge from $7.67 to $15 a month for residential customers, and from $7.67 to $17 a month for commercial customers.
Update 2/5/21: This article has been corrected to reflect that Sierra Club and Vote Solar are involved in a lawsuit with the Public Service Commission of Wisconsin, not Madison Gas and Electric, and that Madison Gas and Electric’s fixed charge has not been instituted recently.
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Hmmm… Generally the Fixed Charge increase is counter-balanced by a reduction in the unit price of electricity. Did this happen? If so there’s nothing to complain about here. I think energy economists would generally rather see unit costs adjusted so they reflect the real-time cost of electricity. Wind and solar use to be super expensive so it made sense (from an advocacy point of view) to hide their costs behind a curtain. Now that RE is cheap we should absolutely work to provide consumers with a better picture of the price of electricity.
It’s unfortunate but Distributed Solar and Efficiency advocates have a perverse incentive to keep electricity costs high. This prevents consumers from seeing the price signals they need to see. Imagine it’s the middle of the night and the wind is blowing to beat the band. If this were the case then you’d expect wholesale electricity prices to be very low and the carbon intensity of electricity to be very low as well. This would be a great time to charge your EV or heat up your water heater. If you consistently followed this charging strategy it could end up so your water heater has higher standby energy losses and you end up consuming more electricity annually than you would in a business as usual situation. Are we going to be so hyper focused on efficiency that we miss the forest for the trees?
Think about what’s happening in the West and Southwest. As we install more and more PV we’re seeing the wholesale price of electricity getting pushed down when solar is peaking. Should we hide this from consumers just because it hurts the economics of rooftop solar? But this is exactly what the Sierra Club and Vote Solar are arguing for here. The utility is taking a step that can potentially help consumers see a better picture of the real time price of electricity.
Think about electrifying heating and transportation. If a typical household in the Midwest did this it could add upwards of 10,000 to 25,000 kWh of additional consumption. If MGE kept their previous rate structure a consumer would see a far higher bill compared to the new rate structure they’ve adopted.
As far as I know efficiency has more to do with air/gap sealing and insulation than it does with when you heat water or use any electric device. I also find it hard to believe that hot water standby losses could amount to 10,000 to 25,000 kWh of additional consumption. I guess over the life of a house. But, this seems to be true unless everyone changes to instant water heaters.
Seems like there should be no fixed costs as that hides whatever the utility wants it to hide – similar to around here where the car dealerships add “additional dealer markup” i.e. profit.
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