Thursday, January 22, 2009

Wisconsin Utility Company Wants Rate Increase Due to a Decrease In Energy Use. In a Recession? Huh?

Did you ever wonder why a utility company keeps asking you to use less energy when in the end, it could only hit them in the pocketbook in the form of lower profits? It never made sense to me either. Could it be these for-profit companies, supplying a life sustaining product like electricity and gas, had a social conscience? Of course not.

So what happens when you spend huge amounts of money on upgrading your furnace, water heater, water softener, dishwasher and refrigerator just to lower your utility bill and use a lot less energy?

Your energy provider asks for a rate increase to make up for the lost profits. Let me get this right; customers will end up paying the same or more on their utility bill, all the while they’re losing money on those expensive new energy conserving products they purchased.

It’s those "down the rabbit hole," upside down market forces folks:
AP-Wisconsin Power & Light is expected to file an emergency request to raise rates because the recession has reduced its revenue. WPL's sales will drop 6.4 percent this year, or $30 million. WPL is losing two top energy consumers - the General Motors plant in Janesville and the Domtar paper mill in Port Edwards. Harvey Bill Harvey, chairman and chief executive Alliant Energy says WPL is "sharing the pain" felt across the utility's service area.

Throughout southern Wisconsin, untold numbers of businesses are paring production and staff. That means less electricity is being used and WPL is collecting less money. WPL's sales this year will be 6.4 percent, or $30 million, lower than those anticipated. Harvey said, "Because of this significant downward shift in forecasts, we will likely file an emergency rate case."

But using less energy has been the goal of utility ad campaigns. So now that less energy is consumed, WPL is whining their profits are down. What a surprise?
Would such a request be considered a bailout? Robert Norcross, administrator of the state Public Service Commission's gas and energy division, said that type of request would likely be controversial envisioning an outcry from people who have lost their jobs and have little or no money coming in for themselves.

Utility companies do not belong in the free market. From this example, which is indefensible, it would appear the free marketers complaints that you don’t increase taxes (rates in this case) in a recession is just so much snake oil.

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