Wisconsin Electric Seeks Relief from PSC due to Spike in Choice Sales

Wisconsin Electric Power Company has petitioned the Michigan PSC for accounting authority to defer, "unrecovered costs of implementing customer choice."

Specifically, Wisconsin Electric said that in the last 90 days, approximately 34 customers whose electric energy load comprised approximately 85% of the Michigan test year sales used in Case No. U-16830 to design the current base rates have submitted customer enrollment forms for Wisconsin Electric’s Retail Access Service (RAS) program.

"Absent approval of this request for deferred accounting, the unprecedented reductions in sales levels given current electric rates will no longer support recovery of authorized costs in the Company’s Michigan operations," the company said.

The Michigan rates approved in Case No. U-16830 were designed on the basis of projected Michigan test year energy sales of approximately 2,547,768 MWh, producing projected Michigan annual base rate revenues of approximately $185,785,000.

As required by MCL 460.10 et seq., Wisconsin Electric has offered RAS in Michigan since January 1, 2002. However, prior to May 2013, no Michigan retail customer of Wisconsin Electric had enrolled in Wisconsin Electric’s RAS program.

The intent of certain customers to take choice service at Wisconsin Electric had been first reported by Matters in June.

As of July 21, 2013, Wisconsin Electric has received RAS Enrollment Forms from customers whose loads comprised approximately 173,731 MWhs. While choice volumes are statutorily capped at 10%, this cap does not apply to certain mines in Wisconsin Electric's service area. These mines, as previously reported, have submitted enrollments to take choice service, and their load was approximately 80% of the test year projected Michigan service level upon which current rates were established.

"Despite the fact that more than 85% of Wisconsin Electric’s Michigan retail test year sales load is in the process of switching to RAS and are no longer generation customers of Wisconsin Electric, Wisconsin Electric is required to maintain and operate generation to support the reliability of the distribution system used to provide service to the connected customers (including RAS service) in the Upper Peninsula of Michigan," the company said.

Due to the steep decrease in bundled sales, Wisconsin Electric requested that the Commission authorize the company, beginning September 1, 2013, to record as deferred expenses in Account 182.3 – Other Regulatory Assets and/or Account 186 the portion of production costs, except variable costs related to fuel, that Wisconsin Electric incurs through 2014 but does not recover at Michigan full requirements customer service levels

"This application seeks approval of deferred accounting treatment only. The ratemaking treatment of such deferred costs shall be determined in a subsequent general rate case or other rate proceedings," Wisconsin Electric said.

Case No. U-17463