I felt the need to post this.  (apologies in advance if there's a double-post - I fat fingered while typing the first time)

Our utility is NE Wisconsin is Wisconsin Public Service.  They recently announced that they are requesting rate increases of 6.9% & 1.2% for electric & gas.  The reason?  Conservation.  People aren't using as much, so they need to charge more.  It's kind of infuriating.


Wisconsin Public Service Corp. wants to increase electric, gas rates

Utility says one reason it needs hike is people are conserving energy
By Richard Ryman • [email protected] •
April 2, 2010

The Green Bay-based utility said Thursday it filed a request with the state Public Service Commission asking for a 6.9 percent increase in electricity rates and a 1.2 percent increase in natural gas distribution rates. The utility calculates the rate hike would increase typical residential electricity bills by $5.31 per month and typical natural gas bills by 94 cents per month. The company said decreased electricity and natural gas use because of recession and increased conservation and energy-efficiency efforts are the major factors in the request. David Kyto, director of rate case process, said the utility has cut $36 million in expenses, but other fixed costs, such as repair and maintenance of electrical lines, natural gas pipes and substations, cannot be reduced. That reduction includes the elimination of 220 jobs. "We simply can't cut back on the activities that make sure the lights come on when the switch is turned and the furnace operates when the thermostat calls for heat," Kyto said. The utility is in the midst of a four-year pilot program using decoupled rates. Under decoupling, the utility is guaranteed a set amount of revenue in return for enacting conservation measures and encouraging its customers to do the same. Decoupled rates apply to residential customers and small commercial customers, but not to large industrial users. The Public Service Commission approved the decoupling mechanism because it reasoned that utilities would have no incentive to encourage consumers to buy less electricity and gas if they weren't guaranteed a set amount of revenue if sales were less than projections.

Runs a bit counterintuitive  eh?
On the other hand, if my electrical rates went down to 0.12$ kwh + 7$ flat fee per month, I would sing and dance.   I currently pay 0.186$ and 16$ flat fee. 
Makes you work even harder to eliminate the power wastes.
Eric

Yeah, I suppose. I just wish they would have had the decency to lie to us about the reason! haha!!

Infuriating yes, but perhaps a step toward the realization of what energy is really "worth." . . . There's also the fact that long-distance transmission from massive, centralized plants is a silly way to distribute electrons.

charlie

They get ya coming and going. Or they throw out the old supply and demand, but in this case they have a greater supply, lower demand, so they charge ya more instead of less. It's all a bunch of BS. Wonder what other products/services companies could "encourage" you to use less of their product/service, and in return charge more.

I should really not say anything, but...

My father used to work for Wisconsin Public Service (the company in question) and retired in 2005. He said that the regulation starting in Wisconsin was going to push rates up drastically. We historically have had some of the lowest electrical rates in the country and with the restrictions and regulations on everything he guessed they would have to go up about 30% from 2005 (when he retired) to 2015, either that or the company would go out of business like what happened in California. Again luckily we started at a much lower energy rate so hopefully it won't get as bad. They are required by the government to spend 1% of their profits on educating and encouraging energy reduction, so they have to spend 1% and get 1% or 2% less in profits because of this. They are capped by the government at making 6% and by doing this they just lost 3% of their income, obviously they can't keep doing things like this or they will go out of business. I heard recently they have to spend another 1% on renewable energy generation, solar, hydro, wind, biomass, ect. Again the cost of that electricity is about 2-5 times what it is if they generate it via coal or purchase nuclear. I am not knocking these things, heck I have 1800w up on our roof. I think things were just fine before the government got in and started messing around, but I don't like with the government messing with just about anything.

I agree that increasing rates in response to conservation is counterintuitive, but consider this:

1. The power company has one source of income, the sale of power.
2. The fixed costs of producing electricity cannot change in response to changing demand.  Power plants, transmission lines, repair crews, coal mines and trains, regulatory fees, etc. must be paid for whether they are being used 100% or 20%.  Remember that the power companies are building facilities to be used 10 or 20 years in the future.  The decrease in demand has occurred in the last year.   Hard to make changes on this time scale, too.
3. The variable costs of producing electricity (fuel) are a relatively low fraction of the cost of production.
4. Everything the power company does is based on peak demand.  They must build facilities to supply the highest demand that might ever be expected.  Brown-outs or black-outs on the hottest day of the year are a bad thing.  In some ways the renewables make this worse; some days the wind don't blow, and some days the sun don't shine...

SO, if demand drops 20%, income drops 20%.  Variable costs might drop 5%.  Fixed costs stay the same.  The only way to recoup the 15% is through increased rates. 

One of the local companies here in Missouri has requested a rate increase for customers with grid-tied solar or wind systems, and it has caused quite an uproar.  The concept is the same, however.  I don't want to buy electricity on sunny days, but I darn sure want the power company to have the capacity and facilities to deliver 100% of my demand when the sun is down and my batteries are dead.  They can't count on my excess electricity 100% of the time, so my generation capacity can't replace power plant capacity.  It's also why most power companies want to pay an 'avoided cost' rate for the electricity they buy from your solar panels.  They are only saving that small fraction of fuel costs by doing so.

I'm not in the industry, so the numbers I used were strictly for illustration...

Posted By Houseinthewoods on 21 Apr 2010 11:25 AM
I agree that increasing rates in response to conservation is counterintuitive, but consider this:

1. The power company has one source of income, the sale of power.
2. The fixed costs of producing electricity cannot change in response to changing demand.  Power plants, transmission lines, repair crews, coal mines and trains, regulatory fees, etc. must be paid for whether they are being used 100% or 20%.  Remember that the power companies are building facilities to be used 10 or 20 years in the future.  The decrease in demand has occurred in the last year.   Hard to make changes on this time scale, too.
3. The variable costs of producing electricity (fuel) are a relatively low fraction of the cost of production.
4. Everything the power company does is based on peak demand.  They must build facilities to supply the highest demand that might ever be expected.  Brown-outs or black-outs on the hottest day of the year are a bad thing.  In some ways the renewables make this worse; some days the wind don't blow, and some days the sun don't shine...

SO, if demand drops 20%, income drops 20%.  Variable costs might drop 5%.  Fixed costs stay the same.  The only way to recoup the 15% is through increased rates. 

One of the local companies here in Missouri has requested a rate increase for customers with grid-tied solar or wind systems, and it has caused quite an uproar.  The concept is the same, however.  I don't want to buy electricity on sunny days, but I darn sure want the power company to have the capacity and facilities to deliver 100% of my demand when the sun is down and my batteries are dead.  They can't count on my excess electricity 100% of the time, so my generation capacity can't replace power plant capacity.  It's also why most power companies want to pay an 'avoided cost' rate for the electricity they buy from your solar panels.  They are only saving that small fraction of fuel costs by doing so.

I'm not in the industry, so the numbers I used were strictly for illustration...

your reply is the most logical I've seen, but it really illustrates how much the utility companies are at odds with conservation, regardless of how much they claim to want to reduce usage.

The interesting thing about this is that if demand increased I'd be willing to bet they'd increase rates too, but that would be explained by "supply & demand".  Demand goes up - price goes up.  Demand goes down - price goes....up?

Posted By jerkylips on 21 Apr 2010 02:10 PM

your reply is the most logical I've seen, but it really illustrates how much the utility companies are at odds with conservation

Absolutely!  I buy electricity from an electric coop here in Missouri.  Their weekly paper is full of 'conservation' but it's all shallow, meaningless talk.  They refused to allow grid-tied solar installations until the state passed a law forcing them to accept net-metering.  Still, it's at the avoided cost rate, which is about 25% of retail.  Then they toss little tidbits out about how the renewable installations they have don't come close to being cost effective.  The rest of the paper is used to solicit people to contact their lawmakers to kill ANY power regulation bills.

Like I said, they only make money by selling power.  Anything else hurts them in the pocketbook.