Wisconsin electric companies raise electricity prices…again
Wisconsinites around the state will soon experience sticker shock when they open their electric bills because monopoly utility companies are asking for a combined half billion in higher energy costs over the next two years. And that’s on top of We Energies’ most recent 11 percent electric rate hike last year, which increased electricity costs for the average Wisconsin family by $144 per year.
Sadly, rate hikes like these will become more common because Governor Tony Evers is seeking to enact government mandates forcing Wisconsin to derive 100 percent of its electricity from sources that do not emit carbon dioxide, with a heavy emphasis on unreliable wind and solar power.
According to a report I coauthored last fall, the Evers Plan to force Wisconsin electricity suppliers to generate 100 percent of their electricity from carbon-dioxide-free sources by 2050 would cost America’s Dairyland an additional $248 billion. This would increase electricity costs for Wisconsin families by an additional $1,089 per year.
Wisconsin businesses and schools would pay even more. For example, besides staffing costs, energy costs are the largest expense for schools, more than textbooks or computers! As a result, the Evers plan would force the Muskego-Norway school district to pay an extra $538,000 per year for its electricity, the equivalent of nine teachers making $58,000 per year.
Unfortunately, the monopoly utilities like We Energies won’t stand in the administration’s way because utilities make money by building new infrastructure. These costs are simply passed along to consumers through a pliant PSC focused more on renewables than ratepayers.
Utilities benefit from a Wisconsin law that allows them to recoup a Return on Equity, or ROE, somewhere around 9.8%. This is the percent return on shareholder equity that a utility is authorized to recover in its utility rates.
In fact, under current laws and regulations, a utility company can build a power plant, shut it down early, build a new energy-generating facility and have ratepayers foot the bill for the dormant plant while also paying for the new one. As unbelievable as it may seem, the more utility companies spend, the more they can charge ratepayers, and all of this spending increases the government-approved profits they make.
This is why We Energies has been making money hand-over first for the last several years, with revenues jumping from nearly $5 billion in 2014 to a jaw-dropping $9.6 billion in 2022. We Energies has increased its profits so much that wealthy Wall Street investors and analysts threw the former We Energies CEO Gale Klappa a fancy dinner party in midtown Manhattan and called him the “Wizard of Wisconsin” because We Energies’ profits grew faster than Berkshire Hathaway’s, the company run by Warren Buffet, the Oracle of Omaha.
Wisconsin electricity customers—who are prohibited by Wisconsin law from shopping around for another electricity provider— are suffering from the higher prices caused by the policies enacted by “progressive” regulators, extreme environmental groups, and monopoly utilities who are laughing all the way to the bank, but it doesn’t have to be this way.
Conservative members of the Wisconsin legislature need to put a stop to Evers’ disastrous Green New Policies by pumping the brakes on the deployment of expensive and unreliable utility-scale wind, solar, and storage projects and increasing their oversight of the utilities and the PSC.
Otherwise, Wisconsin electricity customers will continue to suffer until policy improves.
Isaac Orr is a policy fellow specializing in energy policy at Center of the American Experiment.
For questions or comments, email Isaac Orr at [email protected].