An Eau Claire city commission opposes an Xcel Energy rate increase as it would result in higher charges to homes that use very little electricity.
The Advisory Commission on Sustainability voted 6-0 on Tuesday afternoon to oppose the utility’s 2016 electric rate proposal, which is subject to a public hearing this afternoon in Menomonie.
“The rate increase would fall disproportionately on lower energy users,” commission member Steven Terwilliger said.
Xcel’s request to state regulators would increase the monthly fixed service charge by $10 to each household in 2016 while reducing the cost of each kilowatt of electricity used. Company filings with the Wisconsin Public Service Commission state that the change in billing methods will make Xcel less dependent upon customer consumption levels to recover its costs.
James Hanke, Xcel’s manager of economic development and community service out of the company’s Eau Claire offices, attended Tuesday’s commission meeting to defend the utility’s request to restructure its electric billings.
“We’ve seen fixed rate increases that came from our sister companies in Wisconsin,” Hanke said.
The Public Service Commission already approved monthly fee increases to We Energies, Madison Gas & Electric and the Wisconsin Public Service Corp.
And Hanke noted that rural electricity providers have historically had higher monthly flat charges, including $31.95 for Eau Claire Energy Cooperative members, which is similar to other cooperatives in the region.
But city Sustainability Commission members said this would be a shift in how Xcel has traditionally gotten its revenue increases in Wisconsin through higher electricity rates, while the monthly flat customer fee remained the same.
“In my mind it’s disincentivizing conservation and the use of solar,” commission member Crispin Pierce said of Xcel’s proposal.
By making electricity cheaper, it extends the payback time of solar panels and other renewable energy technology, making them less desirable to households and businesses, commission member James Boulter added.
“People make decisions that are influenced by their pocketbook,” he said.
Hanke replied that customers who paid more for higher power use in the past had shouldered more of the costs of the power grid that everyone uses. That includes small businesses just keeping the lights on and larger families that would just consume more electricity, he said.
“Over the course of the last decade, those increases have fallen disproportionately on that class,” he said.
Cost for connection
In Xcel’s rate request filing with the Public Service Commission, the company attributed the proposed $18 monthly fee to the cost of administration, metering, power lines, transformers and power poles. Previously, these costs to keep customers connected to power had been partially paid through electric usage charges and not the $8 flat monthly fee.
The impact of Xcel’s proposal on the average household consuming 750 kilowatt hours of electricity would be a $4.73 increase on their monthly utility bill, based on an analysis the company provided to the Public Service Commission.
“A minority of residential customers (approximately 26 percent) who use significantly less electricity than the class average will see a larger percentage change in their bills, but in no case will the increase in bills from this rate case be larger than $10 per month,” stated Deborah Erwin, regulatory policy manager for Xcel subsidiary Northern States Power Company, according to a transcript of her testimony to the Public Service Commission.
The few households that use a spartan 100 kWh a month — likely supplemented by generating their own power through solar panels or other means — would get a $9.30 increase in their monthly bills. Meanwhile, households that use double the average electricity consumption or more would see lower bills under Xcel’s proposal.
Hanke noted the company’s analysis of customers who get public assistance to pay their energy bills use about as much electricity as the average household, indicating they wouldn’t see the same increase as very low energy users.
“There’s no correlation with low income, lower use,” he said. “Their energy profile is about 95 percent of a typical customer.”
Xcel’s statistics found its average customer in the Low Income Home Energy Assistance Program uses about 694 kilowatt hours per month.
Eau Claire’s Sustainability Commission wants Xcel and the Public Service Commission to consider an increase that is tied more to electricity usage, which would be more in line with previous rate cases.
The city commission’s recommendation, which will go to the Eau Claire City Council for consideration, suggests a 3.9 percent increase spread evenly between the monthly fee and usage rates.
“If the City Council passes this, it’s going to be on the behalf of the constituents they represent,” said Councilman Andrew Werthmann, who serves on the Sustainability Commission. “It makes a difference.”
People can weigh in on Xcel’s rate request through a public hearing at 1 p.m. today at Menomonie’s Public Library or until Oct. 28 on the Public Service Commission’s website.
The PSC’s online file on Xcel’s rate case had 209 public comments from July through Tuesday evening, most posted in the past three weeks. Comments included how rising rates impact people on fixed incomes, the proposal’s disincentive on energy conservation and Minnesota’s denial of a similar request.
Xcel’s electric rate changes would yield about $27.4 million, and a proposed 5 percent natural gas hike would generate $5.9 million, which would be used for capital investments in the company’s power generation and transmission facilities, according to filings with the PSC.
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