MADISON - The Public Service Commission on Thursday authorized rates for Superior Water, Light & Power average residential customers that would increase monthly bills by $7.18, according to a PSC spokesman.
Under the new rates expected to take effect Jan. 1, residential customers currently paying $72.20 monthly for 573 kilowatt hours would pay $74.93, a 3.08 percent increase. Natural gas rates increased by 1.64 percent, with 74 therms currently costing $60.01 would increase to $60.99.
Residential customers currently paying $54.25 monthly for about 3,000 gallons of water would pay $58.21, or 7.36 percent more.
The cost of water included the Public Fire Protection charge, which is collected for hydrant rental and other utility costs associated with firefighting.
The utility sought increases of 2.01 percent for electric, 2.31 percent for natural gas and 8.26 percent for water when it filed a rate request in June, just two months after an explosion at the Husky Energy refinery that temporarily shut down its largest electric and water customer.
The requested rates drew strong public opposition, with more than 160 individuals asking the PSC not to increase water rates, which are already above the state average for similar-sized utilities.
Public opposition was mentioned briefly by the commissioners, who instead commented several times on the "unusual circumstances" the April refinery explosion created for the investor-owned utility. Although SWL&P was preparing a rate request before the explosion, the loss of revenue going forward is a "unique situation," PSC Chairman Lon Roberts said.
The utility estimated a 13 percent or a $37,000 decrease in net revenue from electric sales from 2017 to 2019, and a 14 percent or a $33,000 net decline during the same time period in water revenue, according to testimony submitted earlier this year by Paul Holt, the utility's treasurer.
During the course of the rate case, Enbridge, Inc. requested lowering their rates closer to the cost of serving them. It noted a cost study which shows that it pays approximately $1.4 million more than the costs the utility incurs to serve it.
PSC staff contended Enbridge's cost figure is based on only one study and the commission does not typically rely on a single study to make the conclusions Enbridge noted.
Enbridge is still ending up with a decrease of 1 percent in this case, at a time when other customers' electric bills are going up.
The commissioners decreased Enbridge's overall rates by 1 percent and said it can control its energy costs through time-of-day rates and seasonal rates. However, this year was not the time to grant Enbridge much lower rates.
"Further relief for Enbridge would be appropriate if not for the (refinery explosion)," Roberts said.
Commissioner Michael Huebsch said: "This avoids a large increase for those least able to afford it."
A study showed that a 5.33 percent rate reduction for Enbridge would be offset by a 17.22 percent increase in residential rates and a 6 percent increase in small commercial customer rates, according to PSC staff.
Citizen Utility Board Executive Director Thomas Content said residential customers "shouldn't have to see higher rates in order to give Enbridge a break."
The utility sought overall rates that would allow it to maintain its current 10.5 percent rate of return of the net value of its infrastructure investment. SWL&P contended that rate was needed due to its relatively small size and dependence on a few large industrial customers. CUB, which intervened in the case in behalf of residential and small business customers, recommended a 10.4 percent rate of return, which it said was a reasonable rate and aligns with the utility's long-term financing costs.
The PSC based the new rates on a 10.4 percent rate of return saying it was a more gradual approach to reducing overall rates in the future, while ensuring the utility would stay financial viable.
The commissioners also set water rates on the assumption that Husky would not resume normal operations until 2020 or later. If Husky returns to past consumption rates sooner than anticipated, the utility would return the excessive revenue collected from water sales to customers in a future rate case.
Holt called that provision the most pleasing to the company.
"If Husky comes back, we're tracking any sales over and above what's estimated for them, and basically accruing that to refund to customers in our next rate filing," Holt said in a phone interview.
The rate order also ends the $2.75 fee for customers who use a credit card to pay their bills. The fee went to a third party. Now, it will be absorbed into the utility's operating costs and collected from all customers in the new rates.
"We're socializing the costs to everyone. Just like paying by check, there's a cost to processing it which is paid by everyone," said Rob Sandstrom, SWP&L's manager of electric operations.
The commission ordered the utility to file a new rate case within two years to monitor ongoing financial conditions. PSC spokesman Matthew Spencer said two years is the normal cycle for investor-owned utilities to submit rate requests.