Agency cuts rate increase sought by Alliant Energy; PSC says utility was tardy with reports

The Wisconsin Public Service Commission has reduced an Alliant Energy rate increase proposal by $3 million.

The PSC ruled this week that Wisconsin Power & Light Co., an Alliant subsidiary, should have informed state energy regulators sooner about transmission grid problems it was going to face in getting power from its Minnesota wind farm to Wisconsin.

In a ruling that in essence penalized the Madison utility, the PSC reduced the rate proposal.

As a result, the 446,000 customers of WP&L in southern and eastern Wisconsin won't see electricity rates go up in January.

During a meeting in Madison this week, commissioners chastised WP&L for informing the Alliant board of directors about the transmission problem in January but not updating the commission on the issue until July.

When it was approving construction of the $460 million Bent Tree Wind Farm project last year, the PSC wasn't aware that transmission bottlenecks in Minnesota would prevent more than 80% of the power from moving onto the interstate power grid, said Eric Callisto, commission chair.

"An issue of this magnitude on a project this large and important to a utility seems to warrant a heads-up to (the PSC) as well as to the board," Callisto said. The PSC vote was the first of several during the next six weeks that will determine what customers of Wisconsin's investor-owned utilities pay for electricity in 2011. Among those seeking increases is the state's largest utility, We Energies of Milwaukee.

Customer groups had pressed the commission to go further, in what would have resulted in a decline in prices for WP&L customers in January.

"We were asking for them to go further, but we're glad at least that ratepayers are going to see some relief for the fact that Bent Tree cannot deliver power to Wisconsin the way it was supposed to," said Charlie Higley, executive director of the Wisconsin Citizens' Utility Board, a customer group representing residential and small-business customers.

WP&L spokesman Scott Reigstad said the company respected the commission's decision but felt it had provided ample information about the issue.

"And transmission constraints are something that are pretty widely known in that part of the country. They're talking about building a lot of projects to get the wind power from west to east," he said.

The commission was able to avoid a rate increase because WP&L collected too much money from customers this year for fuel used by its power plants.

The utility had initially sought a 3.6% rate increase, or an increase of $35 million, to pay for wind farm construction costs.

Reigstad said transmission upgrades are expected to be completed in time to allow all of the wind power generated from the Bent Tree project to move onto the power grid by 2013.

Higley said concerns about the wind farm underscore the significance of the lawsuit that his group and the Wisconsin Industrial Energy Group filed last year after the commission approved the wind farm.

The commission didn't use its most exhaustive review process for the project because it was located outside Wisconsin, but Higley and Todd Stuart of WIEG said it's possible the transmission challenges would have become apparent earlier if the more detailed review process had been used.

The customer groups lost the first round of their court appeal but recently filed a petition asking the state Court of Appeals to overturn the lower court's ruling.

A portion of the Bent Tree project, located near Albert Lea, Minn., is already generating power. The project is expected to be completed by the end of March, Reigstad said. When complete, it is projected to generate enough power over a year's time to supply 50,000 typical homes.

Customers served by WP&L include homes and businesses in parts of Dane, Jefferson, Kenosha, Walworth, Winnebago, Dodge, Fond du Lac and Sheboygan counties.