Proposed Changes to Electric Bills Would Raise Costs for Families with Low Incomes

Tuesday, October 7, 2014 at 4:09 PM by

Three Wisconsin electric utilities have proposed billing changes that would raise energy costs for people with low incomes.

We Energies, Madison Gas & Electric, and Wisconsin Public Service Corporation (WPS) have asked the state’s Public Service Commission for permission to change how the utilities bill for electric service. This request has gotten a great deal of news coverage (see here and here) focusing on how the change would make it less cost-effective for customers to install solar systems that generate electricity, and would reduce incentives to be energy efficient.

Mostly missing from the news coverage has been the fact that the changes would shift costs to customers with low incomes. The utilities want to increase the fixed monthly fee charged to customers, while reducing the usage-based kilowatt-hour charge. The result would be higher costs for people who use little electricity, and lower costs for customers who use a lot of electricity. People with low incomes tend to use less electricity than other residents, and would see their overall bills go up if this proposal was approved – while higher-income customers, who use more electricity, would save money. Wisconsin households with low incomes (defined as at or below 150% of the poverty level) use 9.8% less electricity than households that are better off, according to testimony on this issue by the National Consumer Law Center (NCLC).

Households with low incomes aren’t the only ones who would be paying higher electric bills. Elderly households use 15.5% less electricity than other households, according to NCLC testimony, and would likely see their electric costs rise.

Wisconsin Community Action Program (WISCAP), an organization that advocates for Wisconsin residents with low incomes, opposes the proposed changes. “The effect will be increased costs for low-income customers. Low-income customers will lose control over their energy bills and they won’t be rewarded with savings through energy efficiency,” said Executive Director Bob Jones in a WISCAP press release.

AARP Wisconsin, the Wisconsin Business Alliance, and the cities of Madison, Middleton, and Monona also oppose the proposed rate change.

In defense of the proposed changes, utility companies argue that it makes sense to increase fixed monthly fees because so many of their costs are fixed. As MG&E CEO Gary Wolter said in this The Capital Times article, “A lot of our costs are fixed regardless of whether anybody uses a kilowatt-hour of energy.”  That article does a good job of explaining the MG&E perspective, and you can find more about the MG&E rationale for the proposal here.

MG&E has said that “qualifying low-income customers” can stay on the current rate structure if that works better for them. But a far better solution would be to not implement the changes that cause harm to customers with low incomes and reduce incentives to conserve energy.

Wisconsin’s Public Service Commission must approve the rate requests before they go into effect. Concerned citizens can express their opinion on the proposed rate change by submitting a comment to the PSC for MG&E and for We Energies.  Although the public comment period for WPS has already closed, you can still comment today on the We Energies proposal, and through October 8th on the MG&E rate request. 

We should be working to keep energy costs low for residents with low incomes and structure rates to promote energy conservation. The proposed rate changes would have the opposite effect.

Tamarine Cornelius

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