MGE rate change proposal raises questions about community's values, activists say

A gas and electric pricing change may have implications beyond just the monthly bill. Some Madison residents say that the change is not reflective of the city’s ideals of equity and environmental sustainability.

Madison Gas and Electric Co. (MGE) proposed a change in billing that would raise the monthly base rate while lowering the variable charge that depends on how much energy is used. Ultimately, the change in pricing would lower the current bill for high energy users while raising it for those who use less energy.

The initial proposal sought to increase the base rate from $10 to $69. The publicity about the rate hike has seen MGE significantly lower its request, to $19.

MGE representative Steve Shultz says the proposed pricing change was a response to shifts in energy use patterns and production

“MGE’s rate proposal is consistent with an ongoing national discussion of how to fairly ensure the electric grid will reliably serve all customers and effectively include renewable resources,” he said.

Organizations are speaking out against the base rate increase, including RePower Madison, formed by volunteers in Madison after the news of MGE’s proposal this summer.       

“MGE is saying they’re trying to be fair by saying low energy users aren’t paying a high enough fixed cost,” said Don Ferber, a Sierra Club Four Lakes Group Delegate, who is working with RePower. “We have equity issues here, and that flies in the face of that. We will make sure they get properly reimbursed, so long as they’re representing community’s values.”

According to Mitchell Brey, RePower Madison's Campaign Organizer, apartment dwellers will be some of the hardest hit by the price changes.

Brey estimates 80 percent of Madison residents would see an increase in their bills.

“Students, seniors, those with low income, and some people who live in apartments have a smaller space, are usually using less energy,” he said. “Because the fixed charge is nearly doubling, that’s going to impact their bill quite a bit.”

Now that the initial request has been reduced, Brey expects that MGE will just seek to space the base rate increases over a number of years.

 “We’re expecting that MGE will come back year after year until they get the $69 base rate they asked for in the beginning,” he said.

Businesses also expressed concern about the rate hike, Ferber said, with about 50 sending a letter to the utility indicating their concern.

Union Cab, one of those businesses, has been tracking the pricing change since it was first proposed. Kate Schacter, a member of Union Cab’s Green Team, became concerned at MGE’s original proposal of a six-fold increase in base rate.

“While they removed the higher rate off the table for this year, and they state that there are no other proposals on the table, we are concerned that they are just ‘hiding the scary monster’ from the view of the public,” she said.

A question of values

Those involved with RePower say their activism connected to the rate hike really points to a debate over Madison’s fundamental values and orientation toward conservation. RePower Madison believes the proposed base rate change doesn’t align with Madison’s goals to be green.

They point to their own report citing MGE’s commitment to providing 70 percent of electricity by coal through 2038 [1].

“It locks us into being reliant on a dirty fossil fuel,” Ferber said.

Brey said MGE is involved in the City of Madison’s Sustainability Plan [2], but the base rate change would move the company in the opposite direction of building a community that relies on local, renewable resources as outlined in the document.

Ferber points to MGE’s recent opposition to Madison’s application for solar power along with the base rate increase, as an example of the utility ignoring the community’s vision for energy. “This is not a utility that is listening to this community and part of this community’s values and where we want to go,” he said.

According to Shultz, MGE is committed to a cleaner energy future by using local, renewable resources. He said MGE has reduced its carbon footprint, eliminating coal at a downtown generating station, invested in manure technology for cleaner lakes, and installed solar demonstration projects across the community.

“We are working to gain experience with integrating alternative energy sources,” he said.

Schacter said Union Cab’s concern is rooted less on price and more in its stated commitment to acting in an environmentally conscious manner. She said Union Cab was concerned that policies not geared around conservation in one area may spill over into other areas.

“We will be severely restricted by pricing policies that do not recognize businesses that try to be environmentally conservative,” she said.

According to Schacter, MGE’s decision to reduce payback for installed solar systems would affect Union Cab the most.

While the business will be grandfathered in and pay the existing rate, she has broader concerns. She said Union Cab was denied an $8,000 grant from Focus on Energy, upon which she said MGE has “a fair amount of influence.”

Ferber also worries about the potential of new businesses coming to the Madison area.

“Really, a hallmark of this community that we want to attract businesses looking at a sustainable future,” he said. According to him, some businesses opt out of locating in Madison because they don’t see the city as an energy leader. 

Looking forward

Brey is hopeful that MGE can become a national leader in energy sustainability.

“We think here in Madison there is a potential for really a community-wide effort to make MGE a leader in the nation on moving over to renewable energies, and not a villain. They call themselves a community energy company, and we’d like to see that.”

MGE has promised community discussions, and Schultz said the company will begin an extensive community conversation on Madison’s energy future next year.

“Our effort will include opportunities to share information and to gather input from all of our customers, business and community leaders, key community organizers, civic groups and others. This effort will go forward regardless of the outcome of our current proposal before the Public Service Commission of Wisconsin.”

Shultz said MGE expects a Public Service Commission of Wisconsin decision on the rate proposal sometime after mid-November.

Schacter said Union Cab looks forward to working with MGE at their community discussions. “We sincerely hope that alternative creative pricing models can be found,” she said. “There are many floating around the country that can be considered.”

Brey pointed to Minneapolis and Boulder as examples of what could be so that utilities stay in line with the ideals of their cities. In Minneapolis, a cooperative formed between the city and its utility company, and Boulder municipalized its utilities. According to Brey, there are many options to look into. He said RePower Madison is the beginning of what could be a long-standing campaign, and they are looking for citizens to get involved.

Ferber just hopes MGE listens.

“The problem here is MGE has always been willing to talk to people in the past. There are a lot of nice people there,” he said. “We need results, we don’t need this discussion. We need them to listen to this community. The community will support them if they’re willing to support the community.”