Rate Case Roundup: Wisconsin

In an electric rate proceeding, the Wisconsin Public Service Commission defied the trend of sub-10% ROEs when it signed off on a 10.60% ROE for a small utility, Northwestern Wisconsin Electric Company (NWE).

The commission said that the higher ROE was justified in light of the utility's size and the region in which it serves, which is characterized by a relatively small customer base spread over a large, mostly rural area. However, although the 10.60% ROE is above the ROEs typically approved for energy utilities in recent times, it actually is lower than the 11% ROE allowed in NWE's last rate case in 2011.

The commission ruled that the 10.60% ROE supported a general rate increase of $625,712, or 3.16%. The utility had applied for a little more than $1.586 million in additional revenues, which would have raised its revenue requirement by slightly more than 8%. According to NWE, rising operation and maintenance expenses were the primary drivers behind its request.

After reviewing documents provided by the company, the commission agreed that NWE's current earnings were insufficient to cover its test-year operating expenses. It likewise concurred that the company's present rates were not offering it an adequate return on its capital investments. The commission found that the utility's suggested changes to its rate design were reasonable and appropriate.

Such modifications included implementation of a power cost adjustment clause and elimination of a special controlled water and space heating rate that had been available to residential customers. Instead, a new tariff, denoted an optional off-peak service rate, will be instituted. The company stated that customers previously billed under the old tariff would be allowed to choose between the new off-peak schedule or be transitioned to standard residential rates. The commission deemed the standard versus off-peak options reasonable and consistent with its policies advancing time-of-day pricing.

The commission added that NWE's tariff terms on energy efficiency and renewable resources also were in comportment with state legislative requirements on set-asides for such efforts. Re Northwestern Wisconsin Electric Co., 4280-ER-106, June 20, 2017 (Wis.P.S.C.).