Groups sue Public Service Commission of Wisconsin over utility

Daily Reporter (Milwaukee), Dec 29, 2005 by Sean Ryan

Two groups are taking the Public Service Commission of Wisconsin to court to argue it should've ordered We Energies to return $52 million to ratepayers.

The case centers on a 2000 PSC decision setting a cap on the return on investment the utility could receive from selling electricity and ordered it to refund to ratepayers any revenue in excess of the limit. The suit filed by the Wisconsin Industrial Energy Group and Citizens Utility Board argues the PSC allowed the utility to keep money in excess of the cap.

The two groups made the same argument to the PSC this year when the utility requested a $114.9 million increase in 2005 electric rates to balance the anticipated 14 percent increase in fuel costs. The PSC, on Nov. 23, ruled that the utility could increase its charges by $112.6 million to meet its estimated $710 million in 2005 fuel costs.

The PSC rejected the CUB and WIEG argument that We Energies should be ordered to return money to ratepayers before getting a rate increase. Their new suit is asking the Dane County Circuit Court to reverse the PSC decision.

The money in question is $51.7 million in synergy savings that We Energies retained between 2001 and 2003 by purchasing WICOR Inc. and merging the company with its natural gas and electric subsidiaries. The PSC's 2000 order allowing the merger set a 12.2 rate of return on the utility but allowed the commission to adjust rates if significant over-earnings not related to synergy savings retention occur.

This order point makes clear that the previous commission intended to allow (the Wisconsin Electric Power Co.) to retain its merger- related cost savings and such savings would not be considered for purposes of determining whether there were 'excess revenues,' the PSC wrote in its November decision.

Spokeswoman Linda Barth said the commission would stick to its order.

The commission stands by its decision, which was based on a thorough review of the record, she said.

We Energies spokesman Barry McNulty said the utility agrees with the commission.

We believe the commission made the correct decision, he said.

The energy group's and utility board's suit argues the PSC violated its own administrative rules defining excess revenues as any revenue exceeding limits set in the previous rate case.

The fuel rules as described above require that, with an increase in rates based on a hearing confined solely to fuel costs, the commission shall condition the increase on a refund of any excess revenues collected by the utility, the suit said.