Delivering a pre-holidays gift to the state’s consumers, the Wisconsin Public Service Commission (PSC) in mid-December ordered keeping electric rates unchanged and decreasing retail natural gas rates for two utilities — Wisconsin Public Service Corp. (WPS) and Wisconsin Power & Light (WP&L). The changes are effective Thursday with the start of the new year.

In the aftermath, a long-time state environmental activist group, Clean Wisconsin, claimed Monday it had “unprecedented environmental victories” in 2008, some at the expense of the state’s major utilities, including a conventional coal plant proposal by WP&L and its parent company, Madison, WI-based Alliant Energy Corp.

Shortly before the PSC action on electric and gas rates, Alliant filed a settlement with the state regulatory commission, agreeing to keep electric charges flat and decreasing natural gas retail rates by about $4 million annually. As part of the deal, WP&L also received approval to file a full 2010 test year rate case in 2009 instead of being limited to what is called a “reopener” as specified in its original rate filing this year.

In its actions, Wisconsin’s three-member regulatory commission said WPS natural gas customers will have a decrease of about $3 million annually overall, or less than half of 1%, and as a result, those customers should average about $7 in annual savings. For the WP&L gas customers, the rate drop will be about 1.14%, or $4 million, with an average annual savings of about $15/customer.

Citing projected higher fuel costs primarily, WPS originally requested increases of $85 million for electricity and $15.7 million for gas next year, and WP&L sought a $93 million power rate increase, with a smaller gas decrease of about $1 million annually.

“Declining fuel costs have played a major role in allowing us to successfully hold the line on electric and gas rates for many Wisconsin ratepayers,” said PSC Chairman Eric Callisto. “With Wisconsin in the clutch of tough economic times, lower fuel costs have been a silver lining and I am pleased at how PSC staff, the utilities and ratepayer groups have come together to look at ways to turn this into relief for Wisconsin ratepayers.”

WP&L President Barbara Swan called the settlement agreement that was approved “the best possible short-term outcome for our customers and our shareholders.” Swan said the record of the rate proceeding also for the longer term “clearly established WP&L’s need to collect incremental revenue,” although she acknowledged it was difficult for the PSC to raise rates in the “current economic climate.”

Alliant has lowered its earnings guidance for 2009 slightly from what it had earlier in the fall (Oct. 31): the low end of a $1.95-2.25/share range for the utility, and $2.18-2.48 for Alliant.

In other recent actions, the Wisconsin PSC reiterated the importance of energy efficiency and conservation in curbing demand and addressing global climate change issues in approving a WPS request to conduct a pilot test of decoupling profits from sales, thus removing any disincentives to aggressively pursuing conservation/efficiency programs. Regulators also OK’d a pilot buy-back program for the WP&L utility purchasing the excess power from customer-owned solar systems connected to the grid.

Finally, the PSC announced it will open a statewide solar collaborative to explore how utilities can dramatically accelerate the cost-effective deployment of distributed solar photovoltaic systems throughout Wisconsin.

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