Wis. utilities want customers to cover all fuel volatility 1

Wisconsin's five regulated electric utilities have asked to have fuel increases in gas and coal costs automatically passed along to their customers rather than wait until they can file a formal rate case.

Their regulator said no.

In a bizarre bit of doublespeak, the utilities argued that passing 100 percent of fuel volatility risk along to their customers would be good because:

Executives at several Wisconsin utilities said the changes could benefit shareholders and customers by reducing volatility.

It certainly would reduce volatility for their shareholders. But customers?

Not surprisingly, consumer groups have opposed the measure, again raising the specter of risk-shifting from shareholders to consumers. While they don't make the link between risk and equity returns, it is the natural next step.

More problematically, one has to wonder why energy efficiency isn't yet part of this conversation. A utility with 100 percent fuel pass-through and a 30 percent efficient fleet has no more incentive to conserve (nor penalty to waste) than one with a 50 percent efficient fleet. Take efficiency in the most holistic way possible as [total electricity out] / [total fossil fuel in] and this is a snub not just to efficiency, but also to renewables. It's a logic that only makes sense if there are no opportunities to enhance the efficiency or renewable use in their fleet, which is, of course, nonsense. It is, however, implicit in the regulatory conversation to date.

And the conversation isn't over:

Utility representatives said they expect more work on the fuel-cost issue to take place in 2009 ... We Energies spokesman Brian Manthey said Friday the utility isn't disappointed that the matter has been delayed until 2009, since the company still expects work to continue on a plan to change how fuel charges can be altered. The company would be more concerned if the commission were backing off altogether from changes to the fuel rules, he said.

Call me naïve, but shouldn't we be focusing on how to alter fuel use as opposed to fuel charges?

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