Wisconsin utilities file for rate, profit hikes after Republicans ousted Huebner

A trio of Wisconsin utilities owned by WEC Energy Group is pushing to raise customers’ rates in concurrent proceedings that mark the first major tests for a state utility regulatory panel shaken up earlier this year when Republican lawmakers ousted Commissioner Tyler Huebner. 

Republican legislators effectively fired Huebner in January when they refused to confirm his appointment to the Wisconsin Public Service Commission (PSC), though Huebner had served in the role for nearly four years prior. The obstructionist tactic – delaying and denying confirmation – is a repeat play for Wisconsin Republicans intent on disrupting the agenda of Democratic Governor Tony Evers, who had nominated Huebner.

Huebner’s dismissal marked an acrimonious end to his time on the PSC, where he had established a reputation as an advocate for consumers and clean energy. Republicans cited Huebner’s support for aligning utility rates with customers’ ability to pay as justification for their vote denying his reappointment. 

During his tenure, Huebner challenged utilities’ efforts to benefit their shareholders while burdening their customers with higher bills – including by limiting utilities’ guaranteed return on equity, or ROE, a key profit driver for utilities and a cost that is borne by customers. ROE, set by state regulators, is the profit margin utilities can collect from customers on qualifying expenditures. For example, if regulators set an ROE of 10% and a utility built a $100 million power plant, customers could ultimately cover the $100 million cost of the plant plus another $10 million in utility profits. 

Wisconsin State Senator Rob Cowles, the lone Republican to vote with Democrats to keep Huebner on the PSC, said in a statement provided to the Energy and Policy Institute that Huebner was an informed, thoughtful advocate for utility customers – and applied appropriate scrutiny to utilities, especially WEC, the largest utility company in Wisconsin. Multiple WEC Energy subsidiaries have filed requests to raise rates this year, which will be considered by the revamped PSC.

“After decades of the continued cycle of ratepayer robbery, former Commissioner Huebner fought back, going after returns on equity in rate cases and shooting down an unnecessary monopolist encroachment into the private market,” Cowles said, pointing to a WEC Energy solar program criticized for muscling out competition. “I believe [Huebner’s] ratepayer advocacy will be sorely missed as we unfortunately head into another cycle of rate hikes this year.” 

ROE is often hotly contested in rate cases. Meant to offset investors’ risk, consumer advocates say the metric has ballooned to the point of overburdening utility customers – particularly in Wisconsin. The Wisconsin Citizens Utility Board (CUB), which represents the interests of small business and residential utility customers, estimated that the PSC’s efforts to limit ROE had saved Wisconsinites $95 million since 2023. 

“ROEs are much higher than utility investors require them to be,” Huebner wrote in response to the PSC’s December 2022 decision to trim ROE for WEC Energy subsidiary We Energies to 9.8% from the requested 10%. Citing expert testimony, he argued that “reductions in authorized ROEs have not matched the pace or magnitude of the decline in interest rates over the past 30 years.”

At that time, Huebner also telegraphed his intent to keep ROE in focus, noting that “additional focus will be needed, now and into the future, among this Commission, the utilities we regulate, and intervenors and stakeholders to continue achieving the balance between the financial goals of the utilities and the ability of customers to afford the services.”

In November 2023, the PSC reduced the ROE for three other utilities: Madison Gas & Electric, which saw its ROE cut from 9.8% to 9.7%; Alliant Energy, which saw its ROE cut from 10% to 9.8%; and Xcel Energy, which saw its ROE cut from 10% to 9.8% after it initially requested to raise its ROE to 10.25%. Huebner’s ouster came less than two months later, though all three of those utilities backed his appointment, according to lobbying disclosure filings. Madison Gas & Electric did so as part of a coalition that includes rural electric cooperatives and municipal utilities. WEC Energy, an influential player in Wisconsin energy policy, withheld its support.

Absent Huebner, it remains to be seen how exactly the current regulators – Chair Summer Strand and Commissioners Kristy Nieto and Marcus Hawkins – will weigh customers’ interests against utility profits, but WEC Energy leadership expressed optimism about the new mix of commissioners on February investor call. 

“We’re…