A 10-year wholesale power contract between Wisconsin Electric Power Co. (WEP) and the City of Geneva, IL, is raising eyebrows in Wisconsin. The result of competitive bidding, the contract sets rates some 20 percent below what the city paid WEP under a 1985 contract. WEP will pay $1 million to Geneva for an electric substation. In addition, WEP will pay economic development discounts of up to 6 percent of electric costs for customers that want to leave Geneva or relocate to the city.
The Municipal Electric Utilities of Wisconsin (MEUW) are protesting the contract because WEP has given Geneva discounts and other incentives far beyond those received by any other Wisconsin city; first-year prices fall 40 percent below what most Wisconsin municipals pay for electricity. MEUW executive director Dave Benforado feels that WEP should have made such offers to instate municipalities: "This is exactly what we've predicted will happen under retail wheeling (em big out-of-state customers getting breaks on Wisconsin's energy while Wisconsin's small business customers get taken for granted."
The Citizen's Utility Board (CUB) has asked the Wisconsin Public Service Commission (PSC) to reopen WEP's recent rate case. CUB sees the $1-million payment and other financial incentives as an admission that WEP can afford to cut instate rates. (The Geneva contract goes before the Federal Energy Regulatory Commission, not the PSC).
WEP believes similar contracts will become more common. WEP also expects electric prices to fall for Wisconsin municipals once it is time renegotiate their contracts. t
Lori A. Burkhart is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.