Legislative Issues

BEFORE THE  PUBLIC SERVICE COMMISSION OF WISCONSIN

 Joint Application of Wisconsin Electric Power Company and Wisconsin Gas LLC for Authority

Docket No. 5-UR-109 

To Adjust Electric, Natural Gas and Steam Rates –Test Year 2020

PUBLIC TESTIMONY OF WISCONSIN UTILITY INVESTORS, INC.

       My name is James A. Buchen and I am the Executive Director of the Wisconsin Utility Investors, Inc. (WUI), a non-profit association that represents the interests of individual shareholders of Wisconsin utility stock. I appear today to express our support for the Settlement Agreement Application and Agreement for years 2020 and 2021 filed with the Commission on August 30, 2019 by the Wisconsin Electric Power Company and Wisconsin Gas (Applicants).

        The WUI has approximately 5,000 individual shareholder members who own stock in Wisconsin gas and electric utilities. While representing our member’s interests we also strive to serve the best interests of the more than 50,000 individuals who hold Wisconsin utility stock. The majority of our members are retirees of modest means, who rely on their utility investments to supplement their social security and other retirement income. Their stock ownership also supports an important public interest by supplying the necessary capital to help finance the construction of power plants, transmission lines, solar arrays, wind farms and other needed utility infrastructure. Without the billions of dollars of equity supplied by utility investors, companies would be forced to rely on unacceptable levels of borrowing and/or massive government subsidies to function. Therefore, it is critical that the Public Service Commission carefully balance the consumer demand for low rates with the need to ensure adequate rates of return for investors.

       Concerns that carbon emissions from fossil fuel based electric generation are contributing to climate change, have both the general public and policy makers across the nation demanding that utilities find ways to reduce such emissions as soon as possible. As a result, Wisconsin utilities are in the midst of a fundamental transformation, moving away from fossil fuel based generation to renewables, as the primary means of generating electricity. One of the consequences of this transformation is that existing generating capacity, particularly coal plants, may become redundent or otherwise obsolete before the normal end of their useful lives. How to recover costs associated with these stranded assets has become one of the biggest challenges facing the industry and the Public Service Commission. Utility investors believe that the solutions need to strike a proper balance between the demands of consumers for limited rate increases and the need for the utility companies to remain a good investment, providing attractive rates of return. In the long run consumers ultimately benefit from maintaining financially sound utility companies that are able to attract much needed equity capital.

       With that in mind, Wisconsin Utility Investors, Inc. supports the Settlement Agreement proposed by the applicants and the intervenor groups. We believe that it strikes the proper balance between consumer and investor interests by addressing the issue of stranded assets with a combination of rate increases and an innovative securitization mechanism. The Agreement establishes revenue requirements and rates of return that are lower than those originally sought by the utilities and calls for Wisconsin Electric to seek a financing order under Wisconsin’s Environmental Trust Bond statute that will authorize it to securitize a portion of the undepreciated value of the Pleasant Prairie Power Plant. We also encourage the Commission to approve such a financing order as it is a critical component of the Settlement Agreement.

        Wisconsin Utility Investors, Inc. appreciates the opportunity to provide these public comments to the Commission and thanks you for your time and attention.