SWL&P seeks rate increases on utilities

Superior Water, Light and Power Co. on Friday filed an application with the Public Service Commission of Wisconsin for authority to increase electric, gas and water rates.

The new rates would allow the utility to recover investments made in its distribution systems and operating cost increases since the last rate adjustment in 2011.

The new rates, if approved, would not be as steep as the last, when the PSC approved an overall rate increase of 3.53 percent, which was slated to increase company revenue by $2.66 million.

The overall increase requested in its filing Friday would add about $1.8 million to the company’s revenue, an overall increase of 2.53 percent. Individual utility rates would increase by about 1.22 percent for electricity, 0.66 percent for natural gas and 13.35 percent for water.

The initial filing with the PSC includes information on the company’s revenue requirements, which are used to determine the amount of revenue that needs to be collected by the utility in order to cover its operating expenses, debt payments, construction costs, taxes and a rate of return on its investment.

Since the last rate increase, SWL&P has undertaken major capital improvement projects in water infrastructure, including replacement of water mains on Banks Avenue, the water main and piping on 18th Avenue East and East Second Street and the water main on Tower Avenue, which will be completed when north Tower Avenue undergoes reconstruction next year.

The projects were done in conjunction with city road projects and have or will replace 100-year-old infrastructure.

Major electrical capital projects included replacement of a transformer at the Winter Street substation and switchgear at the Stinson Avenue substation. Both projects involve replacing equipment more than 50 years old.

Rate adjustments requested also reflect two years’ worth of changes in operating revenues, operating expenses and rate base. The last rate adjustment authorized by the PSC went into effect in January 2011.

SWL&P will file additional information with the PSC regarding this rate case in June, including a cost of service study and a proposed rate design for each of the utilities. The cost of service study determines the amount of revenue that needs to be collected to cover the costs of providing service by each utility — electric, gas or water.

The actual amount of any increase in rates by rate class will be determined by the PSC, based on a review of the application and after public hearings, which are expected to be held in the last quarter of 2012. Rate increases, if approved, are anticipated to become effective in 2013.

In the most recent cost rankings issued by the Edison Electric Institute, SWL&P had the 22nd lowest average retail electric rates out of 172 utilities in the United States and the lowest average electric rates in Wisconsin. The company is a wholly-owned subsidiary of Duluth-based ALLETE Inc.

For more information, go to http://psc.wi.gov/apps40/dockets/default.aspx and search for case number 5820-UR-113.

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