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Energy Market Structure Issues Dominate Wisconsin Rate Cases

Fortnightly Magazine - May 1 1997

is reasonable to examine all energy services, including gas sales promotions, for relevance and cost-effectiveness.

The commission rejected a proposal by the utility to reduce the shareholder portion of coal tar cleanup cost identified by the commission in an earlier rate ruling. The utility said the change was necessary so that it could "recover a significant portion of these expenditures before deregulation." The utility also argued the change was necessary to account for a rate freeze it had agreed to as part of a proposal to merge with Northern States Power Co. The commission said the utility should not continue to increase regulatory assets during a rate freeze period. It also ruled the utility should have already considered the effect of the freeze on the coal-tar cost-recovery plan.

Wisconsin Public Service. The Wisconsin commission has also authorized Wisconsin Public Service Corp. to increase rates for natural gas service by $5.687 million while reducing rates for electric service by $35.514 million. It set rate of return on equity at 11.8 percent based in part on positive performance by the company's management.

The commission disallowed the utility's $1.3-million request for natural gas sales promotion activities. It also rejected a second proposal by the utility to shift the promotions budget to its Area Expansion Plan surcharge, an established rate mechanism for recovery of costs associated with the construction of gas main extension is in new service territory. The commission said the utility had failed to support the need for such expenditures.

The commission also concluded that "zero-based budgeting" is appropriate in all of the utility's future rate cases unless compelling justification is provided. The commission approved rate structure updates similar to those adopted in the Wisconsin Electric Power Co. case and reviewed a "sweeping" rate redesign proposal submitted by its staff which utilized annual throughput levels rather than the LDC's current customer meter size concept in allocating costs among customer classes. Re Wisconsin Elec. Power Co., 6630-UR-109, Feb. 13, 1997 (Wis. P.S.C.); Re Wisconsin Pub. Serv. Corp., 6690- UR-110, Feb. 20, 1997 (Wis.P.S.C.).

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