Power bills to rise as utilities build energy infrastructure
Apr 03 - Milwaukee Journal Sentinel
Utilities plan to spend billions on such upgrades in the next few years. The
building boom is in large part a response to electricity shortages that spawned
calls for conservation and near-blackouts on hot summer days in 1997 and 1998.
Two decades of failing to build power plants and new transmission lines kept
Wisconsin power prices artificially low, said Bill Harvey, president and chief
operating officer of Madison-based Alliant Energy Corp.
"We have created a surreal environment" when it comes to energy
pricing, Harvey told more than 160 people who attended a forum at the Milwaukee
Athletic Club.
"All of us are very concerned about our mistakes of the past coming home
to roost and creating price shock on a fragile Wisconsin economy," he said.
"We are correcting an errant course. But the reality is we're catching
up, and catching up in big lumps."
Increases on increases
Those price increases will come on the heels of already higher prices being
paid by many power customers.
Tari Emerson, procurement manager at Charter Manufacturing Co. in Saukville,
said her company -- one of Wisconsin Energy Corp.'s largest customers -- has
faced sizable utility bill increases in recent years.
Some of those increases have been because natural gas has increasingly been
used by utilities to generate electricity at times of peak demand -- and costs
for that fuel have leaped, not just in winter but also during hot spells in the
summer, she said.
"We do have concerns going forward," Emerson said. "Wisconsin
has lost its place as the lowest cost in our Midwestern area. What's going to
happen when we do build the infrastructure that we need to build?"
Rates in Wisconsin were historically the lowest in the upper Midwest -- and
ranked lower than seven nearby states as recently as 1997. But they have crept
up in recent years, and state prices are now in the middle of the pack among
Midwest states.
The state, through the state Public Service Commission, will "do what we
can" to keep rates affordable, Gov. Jim Doyle said.
"But we must be realistic and recognize that years of under- investment
in our energy infrastructure requires that we are going to have to be making
significant capital investments, today and in the years to come," he said.
Gale Klappa, who becomes Wisconsin Energy chairman and chief executive next
month, said customers in southeastern Wisconsin can expect regular rate
increases in the next several years in the range of 3% to 4% a year.
To help minimize increases, Wisconsin Energy will cut its own costs and
improve efficiency and productivity, Klappa said. Without those improvements, he
said, the utility would need electricity rate increases of 6% a year to help pay
for its power-plant building program.
New pricing system
Concerns about rates are responsible for an unprecedented push by Wisconsin
utilities, industries and customer groups to protest a planned energy
transmission pricing system set to kick off in December.
Under the system, Wisconsin could be penalized because of its transmission
problems -- its lack of investment in the transmission grid and the fact that it
has just four high-voltage lines connecting it with the rest of the eastern
United States power grid.
Doyle and Wisconsin's utility executives recently asked the Federal Energy
Regulatory Commission to allow the state to wait five years before joining the
new market being set up by the Carmel, Ind.- based Midwest Independent
Transmission System Operator. That would give the state time to get the $420
million Wausau-to-Duluth transmission line built, as well as new generating
plants.
Some utility regulators and executives worry that Wisconsin's delay could
scuttle the creation of the Midwest energy market.
"MISO may be dead if the market doesn't start, but Wisconsin will be
dead if the market doesn't work," said Jose Delgado, chief executive of
American Transmission Co. ATC operates high voltage lines in Wisconsin, upper
Michigan and part of Illinois.
This week, the Midwest transmission coordinator released a study contending
that Wisconsin would save $51 million a year once the new market opens.
Wisconsin utilities have projected the state could lose $200 million a year.
Although the federal commission doesn't support a five-year delay, it has
pledged to ensure that Wisconsin's utilities and customers aren't harmed by the
market's start-up.
Bloomberg News contributed to this report. Copyright © 1996-2004 by CyberTech,
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