Owen Tries To Lower MG&E Rates

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MTT News Desk's picture
Kevin Murphy
Robert Owen is a fierce critic of MG&E.

A Middleton-based energy consultant doesn’t think MG&E’s requested yearlong rate freeze goes far enough. He believes the Wisconsin Public Service Commission (PSC) should cut the utility’s electric rates this summer.

Robert H. Owen Jr.’s degrees in meteorology, mechanical engineering and law from the University of Wisconsin-Madison and decades of work in utility regulation led him to oppose MG&E’ electric rates based on its coal-fired generating plants, he argued.

“That’s where [MG&E] distinguishes itself as the most costly utility in Wisconsin and possibly the Midwest. I haven’t found comparable ones,” Owen said in a phone interview.

Owen quotes MG&E’s 2012 annual report, in which revenues per customer reach 15.8 cents per kilowatt hour. The closest other utility is Westfield Milling and Electric at 14.3 cents per kwh, he said.

By that measure, every other Wisconsin utility charges customers less, with Superior Water Light & Power the lowest at 9.9 cents per kwh.

Owen attributes the reason for MG&E high generating costs on its investments in the antiquated technology of coal-fired powers, including part ownership in Columbia Energy Center near Portage and the new Elm Road Generating Station in Oak Creek.

A wind energy advocate, Owen contends that utilities can invest in wind-generated power and still have lower rates than MG&E.

“MG&E is just the opposite case. You draw your own conclusions from that, but MG&E’s rates increases over the years have not come from its investment in wind projects but disasters in fossil fuel projects like Elm Road,” he said.

In a brief filed with the PSC, Owen calls the Elm Road Generating Station a “black albatross,” as the $2.3 billion investment, co-owned by a WE Energies subsidiary, MG&E and WPPI Energy, of Sun Prairie, operates only the equivalent of one day per week.

The Midwest Independent System Operator determines when large power plants operate based on energy demand and the cost to supply it. Elm Road Generating Station’s operating costs relative to other available plants keeps its two new 615-mega watt coal-fired units largely on standby status, he said.

“Including the cost of the fuel and the air pollution controls or substances used in the process; when you add it all up, it’s just hasn’t been economical to operate unless the region’s need for generation is high,” Owen said.

If the Congress adopts a tax on those releasing carbon emissions, Elm Road Generating Station and other coal-fired plants costs will go even higher, said Owen.

Owen notes that WE Energies coal-fired Pleasant Prairie Power Plant near Kenosha produces lower cost power and is in continuous use.

MG&E strongly disagrees with Owen’s conclusions and the rate freeze request indicates the utility keeps costs down, company spokesman Steve Kraus wrote in an emailed response.

Kraus didn’t directly address Owen’s criticisms of the utility’s investment in coal-fired power generation, stating those issues have already been reviewed and decided by the PSC.

Instead, Kraus said MG&E residential gas and electric customers pay 10 percent less in energy costs today than they did four years ago. Also, since 2009 the Consumer Price Index has risen on average of 2.2 percent annually, while calculating rates through the 2014 requested freeze, MG&E’s rates have increased by 1.9 percent annually.

“In return for higher rates, MG[&]E is consistently ranked the most reliable investor-owned electric utility in Wisconsin and ranked in the top three most reliable utilities in the United States over the last five years,” Kraus asserted.

“MG[&]E customers can expect and receive a very high-level of customer service. In addition, the company has been out ahead in other ways. MGE was an early adopter of clean, renewable energy technology and discontinued burning coal at our Blount Generating Station,” he added.

Owen finds himself on the opposite side of the issue from the Citizen Utility Board (CUB), which supports MG&E’s rate freeze and doesn’t advocate for a rate decrease.

CUB’s Executive Director Charlie Higley said CUB doesn’t agree or disagree with Owen’s positions and doesn’t address them in their briefs filed with the PSC.

Higley faulted Owen’s “personal attacks” on his opponents saying, “We don’t support that.”

In a brief filed on Monday, Owen called MG&E “the most inept, highest cost, electric utility.”

Owen wants the PSC to re-examine the issues that contribute to MG&E’s costs and if it’s found that the utility’s rates are too high, lower them.

A decision on the rate freeze is expected later this summer.



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